Tagged: AI



  • The MedTech industry faces a pivotal moment as it confronts the challenge of adopting transformative technologies amidst a rapidly changing healthcare ecosystem
  • Despite progress in other sectors, MedTech has shown reluctance to fully integrate digitalization, potentially hindering its growth and competitiveness
  • There have been some notable exceptions such as Medtronic, Siemens Healthineers and Philips
  • Many large diversified MedTechs could unlock growth and value by capitalizing on the potential synergies between traditional medical devices and innovative digital solutions and services
  • The convergence of digital offerings with legacy medical devices provides opportunities for improved patient care, operational efficiency and R&D innovation
  • There is a pressing need for MedTechs to comprehensively embrace digitalization to avoid reduced competitiveness, limited growth, and diminished value enhancement
Forging a path for digital excellence in the MedTech Industry

In an era of rapid technological advancement, the medical technology (MedTech) industry is at a crossroads. While numerous other sectors have enthusiastically embraced digitalization and moved forward, the MedTech sector, barring a few notable exceptions, has been hesitant to embrace these transformative technologies. However, the time has come for large diversified MedTechs to recognize the opportunities that digitalization offers for growth and value creation. The convergence of traditional medical devices with digital solutions and services presents an opportunity for the industry to improve patient care, streamline operations, and drive innovation. Failing to fully integrate digitalization into their operations in a timely way may lead to unexpected consequences, including a shorter window of competitiveness and a struggle to enhance growth rates and augment value. The reluctance of many MedTechs to adapt now could translate into a significant handicap in the rapidly evolving landscape of healthcare technology.
In this Commentary

In this Commentary, we tackle four questions: (i) What is digitalization? (ii) Why is digitalization important for MedTechs? (iii) Which MedTechs have implemented successful digitalization strategies? and (iv) What defines an effective digitalization strategy? In addressing the fourth question, we present a strategy that encompasses 20 'essentials', which are not meant to follow a linear, sequential path. Instead, they are orchestrated by agile cross-functional teams, collaborating and pooling resources. Together, these teams oversee the execution of various elements of the strategy, while assuming responsibility for its overall effectiveness. This approach signals a departure from hierarchical departments and advocates a matrix-style organizational structure characterized by a web of interconnected reporting relationships. This structure goes beyond the confines of the conventional linear framework and incorporates specialized clusters, akin to "nests," each housing unique competencies, spanning multiple dimensions, and encompassing responsibility, authority, collaboration, and accountability.
1. What is digitalization?
Digitalization, also referred to as digital transformation, involves harnessing digital technologies to improve and refine business operations, processes, and services. By integrating digital tools across all facets of an organization, digitalization streamlines workflows, amplifies customer experiences, and achieves strategic goals. This includes automating tasks, utilizing data analytics for informed decision-making, and leveraging cloud computing for scalable and flexible operations. The Internet of Things (IoT) facilitates data exchange through connected devices, while artificial intelligence (AI), machine learning (ML) and large language models (LLM) empower computers to perform tasks requiring human-like intelligence. Virtual and augmented reality (VR/AR) enrich experiences, while cybersecurity measures are important to safeguard digital assets.
2. Why is digitalization important for MedTechs?
Digitalization is important for the MedTech industry since it acts as a driver for significant and positive change. By fully embracing this transformation, the industry develops the ability to use data and analytics to create innovative medical solutions and services. These are built on insights and predictions obtained from large amounts of information. Apart from these benefits, digitalization also affects the core of how clinical operations work. It makes workflows more efficient and frees-up healthcare professionals to focus more on taking care of patients. One significant development is the rise of collaborative telehealth platforms, which play a role in improving the quality and efficiency of healthcare delivery. Additionally, the power of technologies like AI, and ML becomes more evident. These advanced tools, driven by their ability to rapidly analyse vast data sets and make predictions, contribute to breakthroughs in care with the potential to improve patient outcomes while reducing costs.
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MedTech must digitize to remain relevant

Is the digital transformation of MedTech companies a choice or a necessity?

The collaboration between smart devices and blockchain technology becomes important in a digital transformation, enhancing patient safety, and ensuring regulatory compliance. As the MedTech sector embraces digitalization, it enables companies to succeed in value-based healthcare environments, which results in quality care becoming more accessible and affordable. This is partly made possible through remote monitoring and proactive interventions that overcome distance. A distinctive aspect of digitalization is the ability to provide personalized care. Focusing on creating solutions and services tailored to individual needs helps to create an innovative environment within MedTechs, which can be leveraged to drive continuous growth and value creation. As digitalization becomes more influential, the MedTech industry should move closer to personalized health, which means care is centered around patients, innovation is continuous, and growth is more certain.
3. Which MedTechs have implemented successful digitalization strategies?
There are several large MedTechs that have successfully leveraged digitalization strategies to gain access to new revenue streams. Here we briefly describe just three. Philips is known for its diverse healthcare products and services, including imaging systems, patient monitoring, and home healthcare solutions and services. They have successfully utilized digitalization by creating a connected ecosystem of devices that capture and transmit patient data, enabling real-time monitoring and personalized care. Their strategy also includes software solutions for data analysis, predictive analytics, and telehealth, contributing to the creation of new revenue streams beyond traditional medical devices. Siemens Healthineers focuses on medical imaging, laboratory diagnostics, and advanced healthcare IT. Their digitalization strategy involves offering integrated solutions that connect medical devices, data analytics, and telemedicine platforms. For instance, their cloud-based platforms enable healthcare providers to store, share, and analyze medical images and patient data, resulting in streamlined workflows and new revenue opportunities through data-driven insights. Medtronic, a global leader in medical technology, offering a wide range of products and services in various medical specialties, has successfully embraced digitalization by incorporating smart technologies into their devices, such as pacemakers and insulin pumps, allowing remote monitoring and data collection. This has improved patient care and given the company access to new revenue streams through subscription-based services for data analytics and remote monitoring.
4. What defines an effective digitalization strategy?
In today’s business climate, developing an effective digital strategy has shifted from being a ‘nice to have’ to a necessity. As MedTechs navigate the dynamic technology landscape, digitalization has become a priority. In this section, we present a 20 'essentials' for crafting and implementing a digitalization strategy. These are not linear, but collectively constitute a path towards a digital transformation for a large diversified MedTech company.   

1. Crafting a Cohesive Vision
Digitalization starts with an evaluation of a company's existing products, services, processes, and technologies. This forms the basis upon which a vision and strategic goals are constructed. The main objective here is to align a company's aspirations with the dynamic MedTech landscape, creating a basis for innovation. Digitalization entails more than the integration of peripheral technologies. It is a paradigm shift. The initiation of a digitalization vision depends upon sound long-term strategic objectives. This involves not only envisioning the transformative potential of digitalization within an organization but also projecting its impact, whether that be improved patient experiences, data-driven operational enhancements, or the exploration of new revenue streams. As this vision takes shape, often in the form of a story that everyone in an organization can buy-into, it should steer decisions and guide investments throughout the entire digital transformation process. Further, it provides tangible benchmarks against which progress can be gauged and strategies can be refined. It is important that digitalization goals are aligned to the evolving needs of healthcare. MedTechs should harness the power of digitalization to meet the expectations of patients and adapt to dynamic clinical practices. This requires reconciling digital innovations with a company’s core values. A comprehensive and forward-looking vision (story) functions to safeguard a company's strengths against potential challenges. This first step toward a digitalization strategy serves to position a company for sustainable growth and enduring value creation.
2. Leadership commitment
The significance of securing buy-in from senior leadership teams lies in its assurance of resources, funding, and support, which are vital for the success of such an initiative. The endorsement from executives, beyond being a signal of change, serves as a catalyst for the allocation of both financial and human resources and has a substantial impact on the direction and depth of a digitalization strategy. By wholeheartedly supporting such an initiative, leaders disseminate not only a positive message about the importance attached to digitalization, but they also foster employee engagement, subsequently paving the way for the potential integration of digitalization across an entire company.

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Redefining Leadership In The Evolving Landscape Of MedTech

3. Cross-functional synergy
Creating cross-functional teams is central for driving change, and should span departments like IT, R&D, operations, marketing, and regulatory affairs. The nature of a MedTech's digitalization strategy requires diverse expertise to successfully release technology's full potential. IT professionals contribute technical knowhow, which ensures the implementation and integration into existing infrastructure. R&D members provide visionary insights, encouraging innovative solutions and services. Operations specialists optimize processes for digital efficiency. Marketers strategize effective communications of digital progress. Regulatory experts ensure compliance and ethical considerations. Each contribution plays a distinct yet interconnected role, fostering collaborative brainstorming, shared goals, and pooled talents within a developing culture of agility and innovative. This approach breaks down silos, and aims to create a unified, technology-optimized future. Cross-functional teams act as the driving force to transform digital potential into a tangible reality.

4. Informed market insight
Market and consumer research is an important element of the strategy, as it uncovers customer needs, preferences, and pain points in digital healthcare. Such insights form the basis for tailored technologies that cater to specific needs, increasing patient engagement and satisfaction. Additionally, a successful digitalization strategy needs to identify and adapt to evolving trends in the digital MedTech sector. This entails monitoring emerging technologies, shifts in consumer behaviour, and advances in medical practices. Equally important is analyzing the competitive landscape to benchmark offerings and drive innovation. When companies are aligned to market dynamics, they are more likely to become digital leaders, fostering continuous improvement and innovation.

5. Technology assessment
Assessing a company's existing technology infrastructure helps to gauge whether a strategy can effectively leverage current investments and assets. Simultaneously, the assessment should uncover gaps and shortcomings. Identifying these informs targeted resource allocation for new technologies that support digital goals. Thus, a technology assessment allows organizations to strike a balance between leveraging existing capabilities and making targeted investments, in pursuit of their digital transformations.
6. Effective digital solutions
An essential aspect of a digitalization strategy involves identifying effective solutions and services. This process entails exploring various facets of an organization to integrate innovations; from improving customer engagement to optimizing workflows. Equally crucial is deploying technologies that improve patient outcomes, diagnoses, treatments, and monitoring. This stage also identifies potential revenue streams derived from new digital solutions and services, like remote patient monitoring, telemedicine, data analytics, and AI diagnostics, which strengthen existing offerings.
7. Partnerships
Engaging in collaborations with technology companies, start-ups, and various stakeholders creates opportunities for synergistic growth. Such partnerships enable enterprises to tap into diverse expertise, gain fresh perspectives, and access specialized resources, all of which support the development and implementation of digital solutions and services. Collaboration facilitates knowledge and resource pooling, enhancing innovation cycles and ensuring a comprehensive transformation of healthcare services. Simultaneously, acquisitions can enhance in-house capabilities. Exploring the acquisition of companies possessing relevant digital competencies or disruptive technologies offers a potential competitive edge. Such moves can help with assimilating novel technologies and developing a culture of innovation. Acquisitions can assist companies to position themselves as key players, advancing their digital health agenda and solidifying their position in an evolving industry.

8. Data management and security
Enhancing data management entails developing and implementing robust protocols. This involves refining data collection procedures, enforcing privacy and security measures, and adhering to healthcare regulations like the US Health Insurance Portability and Accountability Act (HIPAA) and the EU General Data Protection Regulation (GDPR), which safeguard patient data from breaches or misuse. Such measures establish a foundation for data management and security and help to foster stakeholder trust. Compliance with regulations like HIPAA and GDPR should not simply be viewed a legal obligation, but also as a moral commitment when handling sensitive patient data. Such a proactive stance strengthens a company's reputation for data integrity and helps to avoid legal repercussions.

9. Technology roadmap
A technology roadmap is a blueprint charting a course toward enhanced efficiency, patient-centric care, and heightened competitiveness. Beyond action planning, it provides clarity and purpose in navigating technological advancements. It consolidates an enterprise's digitalization efforts by integrating initiatives with timelines and resources, thereby establishing a framework for goal setting and assessment. Such planning assists timely project execution and supports the rationale for digitalization with measurable benefits. With a well-structured roadmap, stakeholders can appreciate how digital initiatives improve operations, trigger innovation, and enhance patient outcomes.

10. Pilot programmes
Pilot programmes serve as incubators and evidence-based validators for innovations, offering a means to test and enhance digital solutions before they are fully implemented. Such initiatives provide tangible evidence to support an enterprise's commitment to a digitalization strategy. Pilots offer concrete proof of an enterprise’s commitment to its digitalization strategy. Each programme should concentrate on specific solutions and establish a controlled setting for gathering user feedback, which constitutes an on-going effort to refine functionality. Additionally, pilots demonstrate a commitment to user-centric offerings by proactively tackling challenges, thereby improving the chances of successful, large-scale digital deployments.

11. Scalability and integration
Establishing scalability and integration capabilities is important for MedTechs to realize their digital transformation. As healthcare technology landscapes evolve and organizational needs change, the ability of digital solutions to scale and integrate with existing structures increases in importance. Ensuring these attributes contributes to a digital transformation. Scalability emphasizes a company’s adaptability to evolving demands. A scalable digital solution that expands in scope without sacrificing functionality invokes confidence. Further, integrating novel solutions and services with existing systems signals operational intelligence, which adds credibility to the digital transition. When digital solutions merge with legacy structures, they reflect an alignment of traditional expertise and cutting-edge technology. Emphasising scalability and integration involves anticipating future requirements and aligning digital strategies with longer-term organizational objectives.

12. Change management
By supporting a mindset that views digital technologies as enablers rather than disruptors, companies demonstrate their commitment to progress and cultural change. Implementing change management acknowledges the importance of cultural shifts and affirms an intent to embrace digital technologies holistically and sustainably. It acts as the vehicle, which guides an enterprise through transformation, and ensures stakeholder support for technological evolution. Through communication, training, and engagement policies, enterprises lay the groundwork for digital adoption, and smooth technology integration. This strengthens the case for change and demonstrates an organization's commitment to fostering an innovation-receptive environment.

13. Training and skill development
Central to a successful digitalization strategy is an investment in training and skill development. This underlines an organization's commitment to harnessing and effectively utilizing the transformative potential of technology. By training, corporations equip their employees with capabilities required to support digital solutions and services. Training bridges the gap between skill shortages and technological advancements. Empowering employees with the capacity to navigate digital technologies positions an enterprise for a successful transition, by a process that reconciles change with employee growth. Training reinforces the notion that digitalization is not just an operational enhancement but also a means to cultivate a workforce with capabilities, which contribute to operational excellence and sustainable expansion.

14. Regulatory adherence
Regulatory compliance is an important feature of a digital shift, as it demonstrates a company's commitment to upholding the highest standards of patient care and industry excellence. It shows that transformation is about embracing the future with integrity by ensuring that an enterprise’s  innovations are synchronized with the values underpinning medical practice. Adherence to regulatory standards is a declaration of an organization's commitment to patient safety and industry integrity. By ensuring all digital solutions and services adhere to rigorous medical regulations, corporations strengthen their case for digitalization within ethical and legal boundaries. Demonstrating adherence to medical regulations and industry benchmarks reinforces a new digital strategy as a responsible and trustworthy pursuit and showcases an organization's commitment to delivering technologies that both innovate and enhance patients' therapeutic journeys while respecting established medical protocols.

15. Market communication
Crafting a communication strategy is important as it underlines an organization’s commitment to transformation. Employing a variety of smart communication methods to describe the benefits of new digital offerings enables MedTechs to garner support from stakeholders and thereby strengthen their market position. By aiming at healthcare professionals, investors, payers, patients, providers and other stakeholders, these messages inform and persuade by highlighting the tangible benefits they bring to patient care, operational efficiency, and industry progress.

16. Feedback loop and iteration
Stakeholder feedback can be used to enhance digital solutions and services. By engaging users and patients, healthcare technologies can be tailored to cater to specific needs and preferences, fostering a user-centric design ethos. This collaborative approach identifies bottlenecks, deficiencies, and possible enhancements, which contribute to efficacious digital solutions and services. Moreover, stakeholder involvement helps to ensure a company's technological endeavours support broader healthcare goals, enhancing the overall quality of care. Iteration should be synonymous with evolution. Regularly integrating feedback to enhance the functionality of digital offerings enables an enterprise to adapt to market challenges and healthcare advancements.
17. Performance measurement
Effective evaluation of a company's digitalization strategy demands the use of key performance indicators (KPIs). These serve as a compass to assess the impact of digital solutions across patient outcomes, operational efficiency, and business expansion. By selecting relevant KPIs, MedTechs can show stakeholders the tangible effects of their digitalization strategy. These quantifiable metrics offer a lens to observe enhanced patient care, rectify operational inefficiencies, and decipher trends in business growth.
18. Fostering a culture of continuous innovation
An effective digitalization strategy relies on fostering a culture of perpetual innovation, which is essential to maintain a market-leading position. Such an approach encourages the creation, implementation and refinement of smart technological solutions and services. It equips MedTechs with the agility to quickly embrace emerging trends, capitalize on novel prospects, and tackle unforeseen challenges. Further, a culture of continuous innovation encourages an executive mindset that perceives setbacks as opportunities and views technology as evolving tools to improve patient care and operational efficacy.
19. Adaptation to market changes
MedTechs must rapidly adjust their digital strategies to match prevailing technological trends, regulations, and market dynamics. These ever-changing elements emphasize the need for a proactive, flexible digitalization approach that can swiftly adapt. By staying ahead of shifting trends, businesses are better positioned to leverage emerging technologies and provide solutions for evolving market needs. Navigating regulatory changes is equally important. Balancing compliance with innovative solutions ensures the integration of digital offerings in a dynamic healthcare setting. Flexibility should extend to market fluctuations, aligning digitalization strategies with customer demands and competition. This not only helps a company to navigate volatile markets but also positions it as an agile player, primed for change and enduring growth.

20. Embracing longer-term sustainability
For MedTechs, it is important that their digital strategies align with their principal longer-term objectives. Instead of solely pursuing immediate gains, this strategy should support a company's core purpose and future aspirations, which are embedded within its day-to-day operations. Such an approach establishes an innovative, adaptable, and resilient framework and strengthens the potential for growth. When a digitalization strategy is aligned with a company’s longer-term goals, it assumes the role of a catalyst for growth by optimizing the utilization of resources, improving brand resilience, and securing a distinct competitive advantage. During constantly evolving technologies and markets, such an alignment provides the capacity for a company to effectively confront challenges and capitalize on emerging opportunities, thereby either moving into, or securing, a leadership position within the rapidly changing market landscape.
In the face of rapid technological evolution, the MedTech industry finds itself at a crucial juncture. While other sectors have embraced digitalization, many large diversified MedTechs have been hesitant in adopting these transformative tools. Yet, the imperative is clear: for sizable companies, the present demands recognition of digitalization's potential to drive growth and cultivate value. The fusion of conventional medical devices with digital innovations not only augments patient care but also streamlines operations and encourages innovation. The consequences of delaying this integration are significant. Without prompt action, corporations risk narrowing their competitive horizons and struggling to accelerate growth and enhance value. Failure to adapt may result in a substantial disadvantage in the rapidly changing arena of healthcare technology. It is important for MedTechs that have not already done so, to pivot towards digitalization and transform their challenges into opportunities, ensuring a dynamic and thriving future in an increasingly interconnected world.
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  • Digitalization, big data, and artificial intelligence (AI) are transformational technologies poised to shape the future of MedTech companies over the next decade
  • Fully embracing these technologies and integrating them in all aspects of a business will likely lead to growth, and competitive advantage while treating them as peripheral add-ons will likely result in stagnation and decline
  • MedTech executives’ analogue mindsets and resource constraints prevent them from fully embracing transformational technologies
  • There are also potential pushbacks from employees, patients, providers and investors
  • Notwithstanding, there are unstoppable structural trends forcing governments and payers throughout the world to oblige healthcare systems to leverage digitalization, big data, and AI to help reduce their vast and escalating healthcare burdens
  • Western MedTechs are responding to the rapidly evolving healthcare landscape by adopting transformational technologies and attempting to increase their presence in emerging markets, particularly China
  • To date, MedTech adoption and integration of digitalization, big data, and AI have been patchy
  • To remain relevant and enhance their value, Western MedTechs need to learn from China and embed transformational technologies in every aspect of their businesses
Unleashing MedTech's Competitive Edge through Transformational Technologies
Digitalization, Big Data, and AI as Catalysts for MedTech Competitiveness and Success
In the rapidly evolving landscape of medical technology, the integration of digitalization, big data, and artificial intelligence (AI) [referred to in this Commentary as transformational technologies] has emerged as a pivotal force shaping the future of MedTech companies.  Such technologies are not mere add-ons or peripheral tools but will soon become the lifeblood that fuels competition and enhances the value of MedTechs. From research and development (R&D) to marketing, finance to internationalization, and regulation to patient outcomes, digitalization, big data, and AI must permeate every aspect of medical technology businesses if they are to deliver significant benefits for patients and investors. To thrive in this rapidly evolving high-tech ecosystem, companies will be obliged to adapt to this paradigm shift.
Gone are the days when traditional approaches would suffice in the face of escalating complexities and demands within the healthcare industry. The convergence of transformational technologies heralds a new era, where innovation and success are linked to the ability to harness the potential of digitalization, big data, and AI. MedTech companies that wish to maintain and enhance their competitiveness must recognize the imperative of integrating these technologies across all facets of their operations. From improving their R&D processes by utilizing advanced data analytics and predictive modeling, to optimizing internal processes through automation and machine learning algorithms. Embracing such technologies opens doors to enhanced marketing strategies, streamlined financial operations, efficacious legal and regulatory endeavours, seamless internationalization efforts, and the development of innovative offerings that cater to the evolving needs of patients, payers, and healthcare providers.
This Commentary aims to stimulate discussion among MedTech senior leadership teams as the industry's competitive landscape continues to rapidly evolve, and the fusion of digitalization, big data, and AI becomes not only a strategic advantage but a prerequisite for survival in an era defined by data-driven decision-making, personalized affordable healthcare, and a commitment to improving patient outcomes.
In this Commentary

This Commentary explores digitalization, big data, and AI in the MedTech industry. It presents two scenarios: one is to fully embrace these technologies and integrate them into all aspects of your business and the other is to perceive them as peripheral add-ons. The former will lead to growth and competitive advantage, while the latter will result in stagnation and decline. We explain why many MedTechs do not fully embrace transformational technologies and suggest this is partly due to executives’ mindsets, resource constraints and resistance from employees, patients, and investors. Despite these pushbacks, the global healthcare ecosystem is undergoing an unstoppable transformation, driven by aging populations and significant increases in the prevalence of costly to treat lifetime chronic conditions. Western MedTechs are responding to structural shifts by adopting transformational technologies and increasing their footprints in emerging markets, particularly China. To date, company acceptance of AI-driven strategies has been patchy. We suggest that MedTechs can learn from China and emphasize the need for organizational and cultural change to facilitate the comprehensive integration of transformational technologies. Integrating these technologies into all aspects of a business is no longer a choice but a necessity for companies to stay competitive in the future.
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Transformational technologies in MedTech

Digitalization in the MedTech industry involves adopting and integrating digital technologies to improve healthcare delivery, patient care, and operational efficiency. It transforms manual and paper-based processes into digital formats, enabling electronic health records, connected medical devices, telemedicine, and other digital tools. This allows for seamless data exchange and storage, improving clinical processes, decision-making, and patient empowerment. Big data in the MedTech industry refers to the vast amount of healthcare-related information collected from various sources. It includes structured and unstructured data such as patient demographics, clinical notes, diagnostic images, and treatment outcomes. Big data analysis identifies patterns, correlations, and trends that traditional methods may miss. They aid medical research, drug discovery, personalized medicine, clinical decision support, evidence-based care, population health management, and public health initiatives. Data privacy, security, and ethical use are crucial considerations. Artificial Intelligence (AI) in the MedTech industry uses computer algorithms to simulate human intelligence. AI analyzes medical data to identify patterns, make predictions, and improve diagnoses, treatment plans, and patient outcomes. It assists in medical imaging interpretation, personalized medicine, and patient engagement. In R&D, AI accelerates the development of devices and the discovery of new therapies and has the capacity to analyze scientific literature and molecular data. The technology serves as a tool to augment healthcare professionals' expertise and support decision-making.
With the proliferation of large language AI models (LLM) and to borrow from a recent essay by Marc Andreeseen - an American software engineer, co-author of Mosaic, [one of the first widely used web browsers] and founder of multiple $bn companies - everyone involved with medical technology, including R&D, finance, marketing, manufacturing, regulation, law, international etc., “will have an AI assistant/collaborator/partner that will greatly expand their scope and achievement. Anything that people do with their natural intelligence today can be done much better with AI, and we will be able to take on new challenges that have been impossible to tackle without AI, including curing all diseases.”

Two scenarios

We suggest there are only two scenarios for MedTechs: a company that fully embraces transformational technologies and one that does not. The former, will benefit from strengthened operational efficiencies, improved patient outcomes, and enhanced innovations, which will lead to increased market share and investor confidence. By leveraging digital technologies, such as remote monitoring devices, telemedicine platforms, LLMs, and machine learning, a company will be able to offer more personalized, effective and affordable healthcare services and solutions. An enterprise that integrates these technologies into their strategies and business models will, over time, experience improved growth prospects, increased revenues, and potentially higher profitability. These factors will contribute to a positive perception in the market, leading to an increase in company value. MedTechs that fail to fully embrace digitalization, big data, and AI will face challenges in adapting to the rapidly evolving healthcare landscape. They will struggle to remain competitive and relevant in a market that increasingly values transformational technologies and data-driven approaches. As a result, such companies will experience slower growth, lower market share, and limited investor interest, which will lead to a stagnation or decline in their value.
The analogue era's influence on MedTechs

If the choice is so stark, why are many MedTechs not grabbing the opportunities that transformational technologies offer? To answer this question let us briefly remind ourselves that the industry took shape in an analogue era, which had a significant effect on how MedTech companies evolved and established themselves. During the high growth decades of the 1980s, 1990s, and early 2000s, the medical technology industry operated with limited access to the technologies that have since radically changed healthcare. The 1980s marked a period of advancements, which included the widespread adoption of medical imaging such as computed tomography (CT) scans and magnetic resonance imaging (MRI). These modalities provided detailed visualizations of the human body, supporting more accurate diagnoses. Medical devices like pacemakers, defibrillators, and implantable cardioverter-defibrillators (ICDs) were developed and improved the treatment of heart conditions. The 1990s witnessed further advancements, with a focus on minimally invasive procedures. Laparoscopic surgeries gained popularity, allowing surgeons to perform operations through small incisions, resulting in reduced patient trauma and faster recovery times. The development of laser technologies enabled more precise surgical interventions. The decade also saw the rise of biotechnology, with the successful completion of the Human Genome Project and increased emphasis on genetic research. The early 2000s saw the emergence of digital transformation in some quarters of the medical technology industry. Electronic medical records (EMRs) began to replace paper-based systems, increase data accessibility and upgrade patient management. Telemedicine, although still in its nascent stages, started connecting healthcare providers and patients remotely, overcoming geographical barriers. Robotics and robotic-assisted surgeries gained traction, enabling more precise and less invasive procedures. During these formative decades, the medical technology industry focused on enhancing diagnostic capabilities, improving treatment methods, and streamlining healthcare processes. The industry had yet to witness the transformational impact of digitalization, big data and AI that would emerge in subsequent years, enabling more advanced analytics, personalized medicine, and interconnected healthcare systems.
From analogue to digital

During these formative analogue years, MedTechs experienced significant growth and expansion, where innovative medical technologies changed healthcare practices and improved patient outcomes. Companies thrived by leveraging their expertise in engineering, biology, and clinical research and developed medical devices, diagnostic tools, and life-saving treatments. For MedTechs to experience similar growth and expansion in a digital era, they must fully harness the potential of transformational technologies, and to achieve this, there must be a receptive mindset at the top of the organization.
According to a recent study by Korn Ferry, a global consulting and search firm, the average age of CEOs in the technology sector is 57, and the average age for a C-suite member is 56. Thus, as our brief history suggests, many MedTech executives advanced their careers in a predominantly analogue age, prior to the proliferation of technologies that are transforming the industry today. Thus, it seems reasonable to suggest that this disparity in experience and exposure colours the mindsets of many MedTech executives, which can lead to them underestimating and under preparing for the significant technological changes that are set to reshape the healthcare industry over the next decade. Senior leadership teams play a pivotal role in developing the strategic direction of companies and driving their success. Without a proactive mindset shift, these executives may struggle to fully comprehend the extent of the potential disruptions and opportunities that digitalization, big data, and AI bring.
By embracing such a mindset shift, senior leadership teams could foster a culture of innovation and agility. But they must recognize the urgency of preparing for a future fueled by significantly different technologies from those they might be more comfortable with. Such urgency is demonstrated by a March 2023 Statista report, which found that in 2021, the global AI in healthcare market was worth ~US$11bn, but forecasted to reach ~US$188bn by 2030, increasing at a compound annual growth rate  (CAGR) of ~37%. As these and other facts (see below) suggest, the integration of digitalization, big data, and AI has already begun to redefine healthcare delivery, patient engagement, and operational efficiency and is positioned to accelerate in the next decade. To remain competitive and relevant in this rapidly evolving high-tech world, MedTechs must foster a culture of openness to change and innovation. Leaders should encourage collaboration, both internally and externally, and create cross-functional teams that bring together expertise from various domains, including AI and data analytics. This multidisciplinary approach facilitates the integration of transformational technologies into all aspects of the business, ensuring that the organization remains at the forefront of the evolving industry.

Implementation and utilization

Limited resources, such as budgets and IT infrastructure, can hinder the adoption and utilization of digitalization, big data, and AI, especially for smaller companies. Compliance with healthcare regulations like HIPAA and GDPR adds complexity and can slow down technology implementation. Resistance to change from employees, healthcare providers, and patients also poses challenges. Fragmented and unstandardized healthcare data limit the effectiveness of AI-driven strategies. The expertise gap can be bridged through collaboration with academic institutions and technology companies. Demonstrating the tangible benefits of digitalization, big data and AI is essential to address concerns about return on investments (ROI). Strategic planning, resource investment, collaboration, and cultural change are necessary for the successful implementation and utilization of transformational technologies in MedTech companies. 
Organizational and cultural changes

MedTechs must embrace agility and innovation to harness the potential benefits from transformational technologies. This requires fostering a culture that encourages risk-taking and challenges conventional practices. Creating cross-functional teams and promoting collaboration nurtures creativity and innovative solutions. Transitioning to data-driven decision-making involves establishing governance frameworks, ensuring data quality, and leveraging analytics and insights from big data. Talent development and upskilling are crucial, necessitating training programmes to improve digital literacy and add analytics skills. Collaboration and partnerships with external stakeholders facilitate access to cutting-edge technologies. Enhancing patient experiences through user-friendly interfaces and personalized solutions is essential. Investing in agile technology infrastructure, including cloud computing and robust cybersecurity measures is necessary. MedTechs must navigate complex regulatory environments while upholding ethical considerations, transparency, and patient consent to gain credibility and support successful technology adoption.

A further potential inhibitor to change is MedTech investors who may harbour conservative expectations that tend to discourage companies from taking risks, such as fully embracing and integrating digitalization, big data, and AI across their entire businesses. This mindset also can be traced back to the formative analogue decades on the 1980s, 1990s, and early 2000s when investors became accustomed to growing company valuations. During that time, most MedTechs catered to an underserved, rapidly expanding market largely focussed on acute and essential clinical services in affluent regions like the US and Europe, where well-resourced healthcare systems and medical insurance compensated activity rather than patient outcomes. However, the landscape has since undergone a radical change. Aging populations with rising rates of chronic diseases have significantly increased the demands on over-stretched healthcare systems, which have turned to digitalization, big data, and AI in attempts to reduce their mounting burdens. These shifting dynamics now demand a more forward-thinking approach, but investor expectations often remain fixed on a past traditional model, which impedes the adoption and full integration of transformational technologies into MedTech enterprises.

To overcome investor conservatism and reluctance to embrace transformational technologies requires a concerted effort by MedTechs to demonstrate the tangible benefits of these technologies on the industry. Companies can focus on providing evidence of improved patient outcomes, increased efficiency, cost savings, and competitive advantages gained through the integration of digitalization, big data, and AI. Engaging in open and transparent communications with investors, showcasing successful case studies, and highlighting the long-term potential and sustainability of a technology-driven approach can help shift investor expectations and encourage a more receptive attitude towards risk-taking and innovation.
Global structural drivers of change

For decades, Western MedTechs have derived comfort from the fact that North America and Europe hold 68% of the global MedTech market share. These wealthy regions have well-resourced healthcare systems, which, as we have suggested, for decades rewarded clinical activity rather than patient outcomes, and MedTech’s benefitted by high profit margins on their devices, which contributed to rapid growth, and enhanced enterprise values. Today, the healthcare landscape is significantly different. North America and Europe are experiencing aging populations, and large and rapidly rising incidence rates of chronic diseases in older adults. Such trends are expected to continue for the next three decades and have forced governments and private payers to abandon compensating clinical activity and adopt systems that reward patient outcomes while reducing costs. This shift has put pressure on healthcare systems to adopt transformational technologies to help them cut costs, increase access, and improve patient journeys. MedTech companies operating in this ecosystem have no alternative but to adapt. Their ticket for increasing their growth and competitiveness is to adopt and integrate digitalization, big data, and AI into every aspect of their business, which will help them to become more efficient and remain relevant.
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Most developed economies are experiencing aging populations, which affect everything from economic and financial performance to the shape of cities and the nature of healthcare systems. Let us illustrate this with reference to the US. According to the US National Council on Aging, ~56m Americans are ≥65 and this cohort is projected to reach ~95m by 2060. On average, a person ≥65 is expected to live another 17 years. Older adult Americans are disproportionately affected by costly to treat lifetime chronic conditions such as cancer, heart disease, diabetes, respiratory disorders, and arthritis. ~95% of this older adult cohort have at least one chronic disease, and ~80% have two or more. Multiple chronic disorders account for ~66% of all US healthcare costs and ~93% of Medicare spending.

According to a May 2023, Statista report, the US spends more on healthcare than any other country. In 2021, annual health expenditures stood at US$4.2trn, ~18% of the nation’s Gross Domestic Product (GDP). The demographic trends we described in the US are mirrored in all the principal global MedTech markets. Many of which, particularly Japan, are also experiencing shrinking working age populations resulting from a decline in fertility rates, and curbs on immigration. This shrinkage further impacts a nation’s labour force, labour markets, and tax receipts; all critical for resourcing and paying for healthcare services.
MedTechs’ response to structural changes

Western MedTechs’ response to these structural challenges have been twofold: (i) the adoption of transformational technologies, which contribute to lowering healthcare costs, improving innovation, and developing affordable patient-centric services and solutions and (ii) targeting emerging markets as potential areas for growth and development. As we have discussed the first point, let us consider briefly the second. Decades ago, giant MedTechs like Johnson and Johnson (J&J), Abbott Laboratories and Medtronic established manufacturing and R&D centres in emerging economies like Brazil, China, and India, where markets were growing three-to-four times faster than in developed countries. Notwithstanding, many MedTechs, were content to continue serving wealthy developed regions - the US and Europe - and either did not enter, or were slow to enter, emerging markets. More recently, as a response to the trends we have described, many MedTechs are either just beginning or accelerating their international expansions. However, such initiatives might be too late to reap the potential commercial benefits they anticipate. Establishing or expanding a footprint in emerging economies is significantly more challenging today than it was two decades ago. 

For instance, two decades ago, China lacked medical technology knowhow and experience and welcomed foreign companies’ participation in its economy. Today, the country has evolved, enhanced its technological capacity and capabilities, and is well positioned to become the world’s leading technology nation by 2030. No longer so dependent on foreign technology companies, the Chinese Communist Party (CCP) raised barriers to their entry. In 2017, government leaders announced the nation's intention to become a global leader in AI by putting political muscle behind growing investment by Chinese domestic technology companies, whose products, services and solutions were used to improve the country's healthcare systems. Over decades, the CCP committed significant resources to developing domestic STEM skills, and research to achieve “major technological breakthroughs” by 2025, and to make the nation a world leader in technology by 2030, overtaking its closest rival, the US. According to a 2023 AI Report from the Stanford Institute for Human-Centered Artificial Intelligence, in 2021, China produced ~33% of both AI journal research papers and AI citations worldwide. In economic investment, the country accounted for ~20% of global private investment funding in 2021, attracting US$17bn for AI start-ups. The nation’s AI in the healthcare market is fueled by the large and rising demand for healthcare services and solutions from its ~1.4bn population, a large and rapidly growing middle class, and a robust start-up and innovation ecosystem, which is projected to grow from ~US$0.5bn in 2022 to ~US$12bn by 2030, registering a CAGR of >46%. 

>4 years ago, a HealthPad Commentary described how a Chinese internet healthcare start-up, WeDoctor, founded in 2010, bundles AI and big data driven medical services into smart devices to help unclog China’s fragmented and complex healthcare ecosystem and increase citizens’ access to affordable quality healthcare. The company has grown into a multi-functional platform offering medical services, online pharmacies, cloud-based enterprise software for hospitals and other services. Today, WeDoctor owns 27 internet hospitals, [a healthcare platform combining online and offline access for medical institutions to provide a variety of telehealth services directly to patients], has linked its appointment-making system to another 7,800 hospitals across China (including 95% of the top-tier public hospitals) and hosts >270,000 doctors and ~222m registered patients. It is also one of the few online healthcare providers qualified to accept payments from China's vast public health insurance system, which covers >95% of its population. WeDoctor, like other Chinese MedTechs, has expanded its franchise outside of China and has global ambitions to become the “Amazon of healthcare”. China’s investment in developing and increasing its domestic transformational technologies and upskilling its workforce has made the nation close to technological self-sufficiency and has significantly raised the entry bar for Western MedTechs wishing to establish or extend their presence in the country.

China's progress in AI and digital healthcare underscores the urgent need for Western MedTechs to adopt and implement these technologies. To remain relevant and survive in a rapidly changing global healthcare ecosystem, Western MedTechs might do well to learn from China's endeavours in leveraging AI, big data, and digitalization to drive innovation, enhance competitiveness, and ultimately contribute to the transformation of the global healthcare landscape. Notwithstanding, be minded of the ethical concerns Western nations have regarding China’s utilization of big data and AI in its healthcare system and its potential to compromise privacy and individual rights due to the CCP's extensive collection and analysis of personal health data.


Digitalization, big data, and AI are transformational technologies that have the power to influence the shape of MedTech companies over the coming decade, and their potential impact should not be underestimated. Fully embracing these technologies and integrating them into every aspect of a business is necessary for growth and competitive advantage. On the other hand, treating them as peripheral add-ons will likely lead to stagnation and decline. However, the path towards their full integration in companies is not without its challenges. MedTech executives, hindered by their analogue mindsets and resource constraints, often struggle to fully embrace the potential of digitalization, big data, and AI. Moreover, there may be pushbacks from various stakeholders including employees, patients, healthcare providers, and investors. These concerns and resistances can impede the progress of transformation within the industry. Nonetheless, governments and payers across the globe are being compelled by unstoppable structural trends to enforce the utilization of digitalization, big data, and AI within healthcare systems. The large and escalating healthcare burdens facing economies throughout the world leave them with little choice but to leverage these technologies to reduce costs, improve patient access and outcomes. In response to the rapidly evolving healthcare landscape, Western MedTechs are making efforts to adopt transformational technologies and expand their presence in emerging markets, particularly China. They recognize the need to stay ahead of the curve and adapt to the changing demands of the industry. However, the adoption and integration of digitalization, big data, and AI by companies thus far have been inconsistent and patchy. To remain relevant and enhance their value, Western MedTechs, while being mindful of ethical concerns about China’s use of AI-driven big data healthcare strategies, might take cues from their Chinese counterparts and embed these transformational technologies in every aspect of their businesses. The transformative impact of digitalization, big data, and AI on MedTech companies cannot be overstated. While challenges and resistance may arise, the inexorable drive towards leveraging these technologies is unstoppable. MedTech companies should shed their analogue mindsets and resource constraints and fully embrace the potential of these transformational technologies.
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  • MedTechs have experienced significant transformation through mergers and acquisition (M&A) to achieve steady growth, diverting resources from innovative research and development (R&D) initiatives
  • The industry’s M&A activities were fueled by a prolonged period of low interest rates and easy access to capital
  • Consequently, R&D efforts focussed on incremental improvements rather than breakthrough innovations
  • This financial-centric business model led to risk-averse bureaucracies among many MedTechs, resulting in a strategic deadlock with limited growth prospects
  • Adding to the challenges, the current era witness’s debt and asset prices surpassing productivity and economic output
  • For many MedTechs, these macro-economic conditions potentially pose funding constraints, reduced market demand, tightening regulatory challenges, cost pressures, and market volatility, further hindering their ability to overcome the deadlock
  • To address these issues and help MedTechs break free from their strategic deadlocks and create long-term value we propose seven strategic initiatives
The Financialization Dilemma of MedTechs
In the 1990s and 2000s, medical technology companies received praise for their rapid growth. However, they currently find themselves at a crucial juncture, facing challenges of low and stagnant growth rates. Additionally, an uncertain long-term outlook looms over them due to the expansion of global balance sheets surpassing GDP, as well as debt and asset prices outpacing productivity and economic output. This Commentary aims to shed light on how many MedTechs reached this strategic deadlock. It also proposes strategies that these companies can pursue to break free from this predicament, which have the potential to significantly enhance growth rates, improve balance sheet health, and foster value creation.
An era of low interest rates and cheap capital

The financialization of MedTechs has played a significant role in their current strategic deadlock, and the most viable solution lies in accelerating productivity. This financialization was facilitated by a prolonged period of low interest rates and easy access to inexpensive capital. Over the span of four decades, starting from the 1980s to the early 2020s, interest rates steadily declined across most industrialized nations. In the aftermath of the 2008-09 financial crisis, many countries adopted a low interest rate environment to stimulate economic recovery and restore liquidity in their banking systems. For example, the US Federal Reserve Board (Fed) lowered short-term interest rates from 4.25% in December 2007 to nearly zero by December 2008, registering the lowest rate in the Fed's history.
During the era of persistently low interest rates and readily available capital, MedTechs experienced a surge in merger and acquisition (M&A) activities, primarily targeting companies in near-adjacent sectors to capitalize on low-risk opportunities for incremental growth. This trend fostered a culture of consolidation, driven by the desire to access new technologies and broaden product portfolios. While M&A activities bolstered short-term profits and shareholder value, they often led to a neglect of research and development (R&D) initiatives. Acquisitions were perceived as a less risky and quicker avenues for expanding product lines, overshadowing investments in R&D. Consequently, many MedTechs adopted a risk-averse approach, channeling their R&D efforts towards incremental improvements of existing products rather than pursuing ground-breaking innovations that could significantly improve patient outcomes and disrupt the industry. Moreover, the increasingly stringent regulatory environment for medical devices, particularly in Europe, further discouraged companies from investing in R&D due to longer development timelines and escalated costs.
Over the years, these policies resulted in the consolidation of power and resources among a few large players, leading to the emergence of market oligopolies and the decline in industry diversity. This scenario posed challenges for smaller companies with innovative ideas, as they struggled to compete with established enterprises, thereby impeding both innovation and healthy competition. Moreover, established MedTechs benefited from the significant and rapidly growing healthcare demands in affluent Western markets, particularly North America and Europe, which account for ~65% of the global medical device market. In these markets, compensation was often tied to medical and surgical procedures rather than focussing on patient outcomes, further favouring the established industry players. While M&A can be an effective growth strategy, it is important for companies to strike a balance and prioritize innovation alongside their consolidation efforts to ensure sustainable success and drive meaningful advancements in the industry.
An era of surging prices and low productivity

We have now entered a distinct era that differs significantly from the previous era characterized by low interest rates, and easily accessible funds. Starting from March 2022, the Fed has implemented 10 consecutive rate hikes, bringing its benchmark rate to 5.25%. These increases, coupled with high leverage in the corporate sector, escalating geopolitical tensions and  instability in the banking world triggered by the Silicon Valley Bank (SVB) collapse in March 2023, compounds the challenges faced by MedTechs. Furthermore, global balance sheets have expanded at a much faster pace than Gross Domestic Product (GDP). Debt and asset prices have surged far more rapidly than productivity and economic output. This trend is underscored by a report published in May 2023 by the McKinsey Global Institute, which reveals that the past two decades have resulted in the creation of US$160trn in paper wealth but have been marked by sluggish growth and the rise of inequality. According to the report, every US$1 invested has generated US$1.9 in debt.
Strategic initiatives to adapt and thrive

When global balance sheets expand at a faster rate than GDP and debt and asset prices outpace productivity, it becomes a concerning sign for MedTechs who find themselves trapped in a strategic deadlock characterized by sluggish growth and a fading belief in long term value creation. Under these conditions, companies should expect to encounter funding limitations, decreased market demand, stricter regulatory obstacles, cost pressures, and increased market volatility. In such a testing business environment, it is important for MedTechs to adopt bold adaptive strategies and navigate wisely to ensure continuous growth and enhanced value. We suggest seven such initiatives that are likely to help MedTechs break free from their strategic cul-de-sacs. By implementing these with vigour, companies can position themselves for success in an ever-changing and demanding economic and geopolitical landscape.
1. Revamp R&D
In recent times, costs associated with MedTech R&D have escalated. A study published in the September 2022 edition of the Journal of the American Medical Association (JAMA), and carried out by the US government’s Office of Science and Technology Policy, found that the development cost for a complex therapeutic medical device, from proof of concept through post approval stages, is US$522m. Significantly, the nonclinical development stage accounted for 85% of this cost, whereas the US Food and Drug Administration (FDA) submission, review and approval stage comprised 0.5%.
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Re-imagining healthcare
Thus, MedTechs have the potential to optimize their R&D processes, enabling them to develop more swiftly and economically ground-breaking devices that result in enhanced patient outcomes and expanded market share. To achieve this, companies may consider the following strategies to improve their R&D processes: (i) Integrating artificial intelligence (AI), machine learning, and big data techniques into their R&D endeavours and harnessing the power of these advanced technologies. (ii) Collaborating with academic institutions and start-ups to gain access to novel innovations and expertise. This collaboration can involve joint development and co-creation of innovative offerings. To tap into a diverse pool of expertise and resources, companies should consider a platform-based approach to R&D, which potentially improves the capacity to drive breakthrough advancements that improve patient care. (iii) Implementing agile methodologies to accelerate the R&D process, which involves breaking projects into smaller, more manageable segments and swiftly iterating based on stakeholder feedback. (iv) Engaging patients in the design process to ensure that newly developed offerings cater specifically to their needs, ultimately enhancing patient satisfaction.
2. Emphasize patient-centric care
Enhancing patient-centric care to improve outcomes is a crucial factor in the future of healthcare provision. There is a growing body of evidence indicating that patient choices will have an increased influence on the provision of healthcare over the next decade. With patients having more options and autonomy, MedTechs can leverage patient-centric strategies to better understand and address their needs, ultimately leading to improved market share. To achieve this, companies must prioritize effective communication, product education, and support services to build stronger relationships with patients. This requires increased utilization of electronic health records, advanced AI, data analytics capabilities, active engagement with patient communities, leveraging social media platforms, establishing patient advisory boards, and forging partnerships with payers and providers.
Further, embracing value-based care models is important for MedTechs. By prioritizing positive patient outcomes over quantity, companies can contribute to the development of sustainable care. As global healthcare systems transition toward value-based care, MedTech companies should align their offerings accordingly. Emphasizing solutions that enhance patient outcomes, reduce healthcare costs, and provide overall value positions, MedTechs become indispensable partners in the evolving healthcare landscape. This also may involve developing outcome-based pricing models, implementing remote monitoring solutions, and demonstrating real-world evidence of product effectiveness.
3. Revitalize organizational and operating models
Revitalizing organizational and operating models is essential for MedTechs to boost their growth rates and adapt to a rapidly evolving market. While companies experienced significant growth in the past, recent trends have shown a shift towards risk-averse bureaucracies, accepting modest annual growth rates as the "new normal". To overcome this stagnation and meet evolving customer demands, traditional MedTechs should consider embracing agile and flexible structures.
By flattening hierarchies and fostering cross-functional teams, organizations can facilitate faster decision-making processes. Implementing lean manufacturing and optimizing operational processes can reduce waste, enhance productivity, accelerate time to market, and lower costs. Leveraging AI-driven data analytics enables the extraction of valuable insights from vast datasets, empowering MedTechs to anticipate customer needs and market trends.

4. Harness the power of digital, AI and big data
Digital transformation has become a necessity rather than a choice. Although companies like Stryker and Siemens have championed digitalization, widespread implementation still remains a challenge. Indeed, Siemens’ suggests digitalization is “something that is often talked about but not fully implemented”. Previous Commentaries have shown how MedTechs can employ digital technologies to improve products, streamline operations, enhance customer experiences, and reduce costs. Streamlining operations and optimizing costs without compromising quality is crucial in the face of escalating economic pressures. This may involve re-evaluating supply chains, improving manufacturing processes, and adopting digital solutions.
In today's rapidly evolving digital age, investing in digital and analytics capabilities has become indispensable for companies as they shape their R&D, hone their processes and shift to a customer-centric stance. The seamless integration of digital and AI-driven techniques, along with data-driven decision processes, has emerged as a crucial factor in maintaining and improving competitiveness. For MedTechs, it is imperative to cultivate a culture of innovation that encourages and rewards experimentation and risk-taking. By doing so, organizations create an environment where employees are empowered to explore ideas, learn from failures, and ultimately drive meaningful innovations.  Therefore, actively seeking external partnerships with technology companies, start-ups and academic institutions is a strategic move for MedTechs to access cutting-edge technologies and expertise in digital and analytics. By embracing these capabilities as core rather than adjunct components of their strategies, fostering an innovation-centric culture, and investing in talent development and retention, corporations position themselves optimally to leverage the transformative potential of digital and analytical technologies. This, in turn enables them to thrive in an increasingly interconnected and data-driven healthcare ecosystem.

5. Talent acquisition and retention
The rapidly changing landscape of globalization, the increasing influence of AI techniques, and the demands of a new generation of consumers seeking personalized experiences have compelled MedTechs to reassess their approach to talent acquisition and retention. To keep up with the pace of change, it is crucial for these companies to attract and retain highly skilled professionals with expertise in technology, healthcare, and business. A talented workforce plays a vital role in driving innovation, ensuring efficient and safe processes, navigating complex market dynamics, and effectively executing growth strategies. To achieve this, companies should invest in the development of their employees, foster a culture of innovation, and offer competitive compensation packages to attract and retain top performers.
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According to a study published by the Harvard Business Review in January 2020, retaining top talent has become increasingly challenging for employers. The study revealed that in 2018, 25% of employed Americans left their jobs, with approximately 33% of this turnover attributed to unsupportive management and a lack of development opportunities. MedTech companies are not exempt from this trend, and to acquire and retain talent, they must strategically revamp their value propositions to align with the evolving needs and expectations of the modern workforce.
A crucial step in this direction is fostering a purpose-driven culture that highlights the significant impact medical technology companies have on improving people's lives. By instilling a sense of purpose, employees are more likely to develop a strong connection to the company's mission, inspiring them to consistently deliver their best work. Furthermore, providing ample career development opportunities is essential in empowering employees to enhance their skills and progress in their professional journeys. This can be achieved through training programmes, mentoring initiatives, and leadership development schemes.
Recognizing the importance of work-life balance is also critical. MedTechs can prioritize flexible working hours, a 4-day week, remote work options, generous vacation policies, allowing employees to effectively balance their personal and professional lives. By creating a supportive environment that promotes overall well-being and job satisfaction, companies can foster employee loyalty.
Competitive compensation and benefit packages are essential. Additionally, a commitment to diversity and inclusion is pivotal for MedTechs aspiring to become employers of choice. By emphasizing diversity in hiring practices and cultivating an inclusive work environment where every individual feels valued and respected, corporations can attract and retain a diverse array of talent. This, in turn, creates an environment conducive to enhanced innovation, creativity, and problem-solving.
Despite best efforts, there may be instances where companies are unable to attract and retain individuals with the necessary capabilities. In such cases, strategic partnerships, joint ventures, licensing agreements, and co-development initiatives allow MedTechs to tap into external expertise and resources, which can be employed to enhance product portfolios and gain access to new markets.

6. Realize global opportunities
MedTechs, traditionally reliant on most of their revenues from affluent US and European markets, now have the chance to expand their horizons and explore the untapped potential of the rapidly growing markets in Asia, Middle East and Africa, and Latin America. These regions boast transitioning demographics, with aging populations and a surge in chronic diseases. Additionally, their large and expanding middle-class populations demand advanced care, prompting governments to increase their healthcare expenditures significantly. By venturing into and expanding their footprints in these markets, Western MedTechs can diversify their revenue streams and leverage the growth opportunities stemming from the escalating demand for cutting-edge medical technologies and services.
Expanding into emerging markets not only provides a means to mitigate risks associated with economic volatility and changing regulatory environments but also necessitates acquiring new capabilities, fostering a change in executive mindsets, and embracing flexible pricing models. By adapting to the unique demands and challenges of these markets, MedTechs can position themselves strategically to tap into the vast potential they offer. This expansion serves as a catalyst for sustained growth and allows companies to seize opportunities that would otherwise remain untapped, thus bolstering their long-term success.

7. Align with rising ESG standards
To fully leverage their capabilities and resources and meet rising standards in ESG (Environmental, Social, and Governance), MedTechs might consider taking bold actions that: (i) embrace sustainable manufacturing practices to minimize their environmental impact, which entail reducing waste, water, and energy consumption, as well as transitioning to renewable energy sources. Such practices contribute to environmental conservation and mitigate a company’s carbon footprint, (ii) adopt circular economy principles, which involve designing products with a focus on reusability and recyclability. Additionally, establishing take-back programmes for end-of-life products, which ensure responsible disposal and encourage the reuse of valuable materials, thereby reducing waste and promoting sustainability, (iii) develop products that improve patient health, safety, and overall quality of life. This requires a patient-centric mindset, discussed above, that emphasizes the social impact and positive contributions MedTechs can make to society, (iv) produce offerings that are accessible and affordable to all segments of society. By addressing underserved communities and partnering with them to provide better healthcare solutions, companies can contribute to reducing healthcare disparities and promote equitable access to quality care, (v) enhance transparency and accountability, which includes setting clear targets, regularly measuring and reporting progress, and disclosing ESG performance, and (vi) engage with stakeholders, such as investors, customers, payers, employees, and patients, to better understand their expectations and concerns regarding ESG issues. Such a bold proactive approach to ESG issues contributes to a more sustainable and equitable world, strengthens a company’s reputation, and fosters its long-term success.
In today's rapidly evolving and technology-driven world, a successful pivot for MedTechs, which have been financialized and now find themselves in a strategic cul-de-sac, requires a simultaneous introduction of the suggested strategic initiatives, rather than a sequential approach. To regain high growth rates and create long-term value, MedTechs must:
  1. Revamp R&D efforts to develop innovative solutions and services that address evolving market needs, prioritizing cost-effectiveness, and improved patient outcomes as primary drivers of value creation.
  2. Prioritize patient-centric care by delivering solutions and services that significantly enhance outcomes, establishing a reputation for consistent value provision.
  3. Revitalize outdated organizational and operating models through increased collaboration with industry stakeholders, enabling accelerated technology development and adoption. This ensures alignment with patient needs and facilitates swift market entry.
  4. Harness the transformative power of digital technologies, AI, and big data to unlock new possibilities for innovation, efficiency, and personalized healthcare experiences.
  5. Attract, retain, and develop talent equipped with 21st-century capabilities while fostering a purpose-driven culture that fuels innovation and drives organizational success.
  6. Recognize and capitalize on the vast and rapidly expanding opportunities present in emerging markets, approaching them with a strategic mindset.
  7. Align with ascending ESG standards, demonstrating a commitment to sustainability, ethical practices, and social responsibility, which reinforces the credibility and long-term viability of MedTechs.
By embracing these strategies simultaneously, corporations position themselves to navigate policy shifts, overcome global uncertainties, and take advantage of evolving technologies, which stand them in good stead to enhance their growth rates, and significantly improve their value.
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  • China is the world’s second largest economy after the US
  • Its MedTech sector is the world’s second largest after the US and accounts for 20% of the global market
  • The size of China’s market is attractive to Western MedTechs but its regulatory and competitive environments are changing, which makes it more challenging for foreign corporations to enter or grow their franchises in China
  • China’s healthcare system has similar structural challenges as those of the US and other wealthy nations: the demand for care is increasing and overwhelming health professionals, which creates care gaps
  • China is ahead of the US and other nations in attempting to reduce such gaps with patient-centric innovative digital therapeutic solutions, which is supported by a deep bench of capabilities
  • Western MedTechs have a lot to learn from Chinese digital health innovations
  • However, Beijing is engaged in an unprecedented mission to become a self-reliant, high-tech economy and a world superpower within the not-too-distant future
  • Misjudging Beijing can have significant commercial consequences
Learn from the Chinese, but don’t misjudge Beijing

An earlier Commentary ended by posing the question whether Western MedTechs can compete with China’s large and rapidly growing domestic medical device industry, which benefits from China being the second largest MedTech market in the world behind the US, with annual sales revenues of ~US$84bn in 2020. China now accounts for ~20% of the global medical device market, which is expected to continue an upward trajectory, supported by the nation’s quickly aging population, rising incomes, and the continued enhancement of health services.
With this foundation, Beijing is incentivising its domestic MedTech companies to expand internationally. Beijing’s 14th Medical Equipment 5-Year Plan (2021–25) sets a goal to have >6 Chinese MedTechs among the top 50 global industry corporations by 2025. The policy complements Made in China 2025, which is a macroeconomic strategy to reduce China’s reliance on imported foreign products including medical devices. So, while China’s domestic market is becoming more challenging for foreign MedTechs, Beijing is supporting the growth and expansion internationally of its local medical device companies to compete with their Western counterparts. For example, Mindray Medical International, China’s biggest medical device corporation by sales revenue, is the #4 ultrasound vendor in the world and over the next 5 years, expects to increase its overseas sales revenues from <50% today to ~70%.
Despite Beijing’s ‘for China’ policies, many Western MedTech leaders view China as a significant commercial opportunity, recall foreign corporations that have prospered in the nation over the past two decades and suggest that it is important to do business there if one of your company’s objectives is to grow its international franchise. But China has changed, and its regulatory and competitive ecosystems are tightening, which present headwinds for Western MedTechs that were not present a decade ago. Further, China has an ambition to become a self-reliant, world leading high tech nation in the not-too-distant future, which could have consequences for foreign companies participating in the Chinese market.
With ~400m chronic disease patients, a fast-aging society, vast and rapidly rising healthcare costs, and an economy that has slowed, China is resolute in developing a new model of digitally enabled, patient-centred integrated healthcare. This ambition is supported by significant resources and a deep-bench of capabilities positioned to enable China to achieve its goals, which include transforming its medical devices sector by supporting the development of world class, high tech, patient-centric, digital enterprises.
All these factors suggests a dilemma for Western MedTech leaders: China is too big to ignore, but Beijing is too powerful and unrelenting to misjudge.

In this Commentary

This Commentary has 3 sections. The first, entitled ‘Reducing care gaps with digital therapeutic innovations’, suggests that China, the US, and other developed nations share a common challenge of care gaps created-by a limited supply of health professionals and a large and increasing demand for care. China’s attempts to resolve these gaps differ from other nations in their scale and nature. They are nationwide innovations predicated upon digital AI strategies, which manifest themselves in digital platforms that directly address patients’ healthcare needs. We briefly describe a few examples of these and suggest that they are advantaged by China’s data policies and AI competencies. Section 2, entitled ‘Capabilities’, describes Beijing’s plans for China to become the world’s leader in AI technologies within the next decade and suggests that China has the capabilities to achieve this goal in the proposed timeframe. The final section entitled, ‘Understanding Beijing’, briefly describes the tightened regulatory and competitive environments and suggests how this impacts the business models of Western corporations seeking to enter the Chinese market or increasing their existing franchises. We posit that China and the Chinese are significantly different to Western democracies and Westerners and emphasize the Chinese Communist Party’s uncompromising ambition to become economically self-reliant, a world superpower and a global high-tech leader. Misjudging Beijing could be commercially damaging for foreign corporations.
1: Reducing care gaps with digital therapeutic innovations
China has similar structural healthcare challenges to the US and other developed economies, which manifest themselves in care gaps caused by a limited supply of overworked healthcare professionals and a vast and rapidly growing demand for care from aging populations. The Chinese population ≥65 years is ~140m, and this cohort is expected to grow to ~230m by 2030. By that time, the nation’s aging middle class will have grown from today’s ~0.3bn to ~0.7bn. High-risk behaviours like smoking, sedentary lifestyles, and alcohol consumption as well as environmental factors such as air pollution take a huge toll on health and increase the demand for care. According to Statista, a large portion of the Chinese population suffer from chronic lifestyle diseases, which account for >80% of the nation’s ~10m deaths each year; >0.5bn people are overweight or obese, while high blood pressure is a common illness among >0.4bn people. China’s healthcare expenditure is growing at >8% a year, and without reform, the nation’s health spending could increase to >US$2trn by 2030. Such factors, together with the nation’s economic slowdown motivate Beijing to prioritize the transformation of its healthcare system.
Significant differences in tackling care gaps

A significant difference between China and the US and other wealthy nations, whose healthcare systems are all in need of reform, is that China has been quicker to develop digital therapeutic technologies to reduce care gaps and relieve its large and rapidly growing burden on hospitals, care systems and families caring for the sick and elderly.
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Should MedTechs follow surgeons or patients?

In any healthcare system, people should be the priority, but because of a dearth of health professionals, overburdened hospitals, soaring health costs and overworked physicians, patients’ needs are often not prioritized. China has been no exception but expects to reverse this trend with the help of artificial intelligence (AI) enabled digital therapeutic solutions that put patients first. Examples include: WeDoctor, Alibaba Health, JD Health, DXY.cn. and Ping An Good Doctor. These, and other digital innovations, provide a range of health services including, online consultations, hospital referrals and appointments, health management, medication regimens, medical insurance, and wellness and prevention programmes. China’s early adoption of AI medical solutions has benefitted from Beijing’s “Healthy China 2030” policy, which, since its launch in 2016, has directed substantial funds to Chinese AI start-ups developing technological innovations to ease the burden of care gaps. According to Tracxn, one of the world’s largest tracking platforms, there are ~227 AI driven healthcare start-ups in China. Let us briefly describe three established ones: WeDoctor, DXY.cn and Ping An Good Doctor.

Tencent-backed WeDoctor, founded in 2010 to provide people with physician appointments, is based in Hangzhou, a city of ~11m and the capital of China’s Zhejiang province. Since its inception, the company has grown into a multi-functional platform offering a range of medical services predicated upon a database of >2,000 Western treatment plans, online pharmacies, health insurance, cloud-based enterprise software for hospitals and other services. Today, WeDoctor hosts >270,000 doctors and ~222m registered patients. It has an impact on reducing care gaps and is one of the few online healthcare providers qualified to accept payments from China's public health insurance system, which covers >95% of the population. WeDoctor's services are especially valued in rural areas, where there are fewer physicians than the national average of 1.5 per 1,000 people.

In response to the COVID-19 crisis the company launched the WeDoctor Global Consultation and Prevention Center (GCPC),  which provided a free 24/7 global online health enquiry service, psychological support, prevention guidelines and real-time pandemic reports. Just before the pandemic, WeDoctor planned to float its medical and health service function on the Hong Kong stock exchange at a valuation ~US$7bn. However, it was pulled because of the Beijing-Hong Kong tensions. WeDoctor’s. other business functions, which include health insurance and health data services, were not included in its proposed flotation, and are likely to stay private to appease Chinese regulators.
DXY.cn is an online healthcare community for doctors, patients, and healthcare organizations. It was founded in 2000 and is also based in Hangzhou. Over the past 2 decades it has evolved into the world’s largest community of physicians who use the platform to gain insights from colleagues, discuss new medical research, and report unusual clinical events. More recently, DXY has added a consumer-facing service that brings wellbeing advice and medical consultations to the public. DXY generates revenues from public-facing medical advertising and job recruitment for its life science clients, as well as clinics where patients can receive in-person medical care. According to TechCrunch, in 2021, DXY reached ~130m consumers, >9,000 medical organizations, and had a registered user base of ~20m.
Ping An Good Doctor

Ping An Insurance (Group), is one of the world’s largest financial services companies with >210m retail customers and ~560m internet users and is headquartered in Shenzhen, southeastern China. In 2014, it launched Ping An Good Doctor to provide end-to-end, AI-powered health services directly to patients. These include 24/7 online consultations, diagnoses, treatment planning, second opinions, and prescription management solutions. Today, Good Doctor has ~400m registered users and drives synergies across China’s healthcare ecosystem. The platform collaborates with >3,700 hospitals and is supported by an off-line healthcare network of >2,200 in-house medical staff and ~21,000 contracted experts to ensure quality and accuracy of its medical services. The company provides insurance coverage for both users and physicians, which helps to ease China’s healthcare payment pressures. Ping An Good Doctor’s technology also assists patients to manage their personal health records, treatment plans, and medical histories.
In 2019, the company launched the world's first AI-powered, un-manned healthcare service: the One-minute Clinic. This is a 3m2 booth, which patients walk into, enter their digitized medical history from their mobile phones, and add their symptoms. The clinic’s algorithms, which have been trained on data from >300m medical records, then make a diagnosis, prescribe drugs, and provide a treatment plan. Medications are purchased from an adjacent vending machine. Within a year of the start of the first clinic, Good Doctor rolled out ~1,000 units in shopping malls, airports and other public spaces throughout China providing onsite medical and pharmaceutical services 24/7. Today, the clinics provide accessible and affordable medical and health services to >3m users. Good Doctor believes that its AI-driven, un-manned clinics have a promising future helping to reduce China’s care gaps and has plans to expand its services into Southeast Asia. In December 2019, the company signed a strategic collaboration with Merck, an American pharmaceutical multinational to advance further intelligent healthcare in China.

Internet hospitals

Digital initiatives like those described above have led to the development and spread of internet hospitals, which are online medical platforms associated with offline access to traditional hospitals that provide a variety of services directly to patients. Today, internet hospitals are booming in China, driven jointly by government and market initiatives.
The first internet hospital was established in China’s Guangdong province in October 2014. It consisted of four clinics operated by doctors from the Second People's Hospital, an online platform operated by a medical technology company, and a network of medical consulting facilities based in rural villages, community health centres, and large pharmacy chain stores. Initially webcams were used for patients to communicate with physicians and share medical images of their conditions. A patient's vital signs were taken by on-site machines and uploaded onto the system. With all this information, physicians made a diagnosis and prescribed medications, which patients obtained from nearby pharmacies. According to the Lancet, two months after its launch, China’s first internet hospital “was dealing with ~200 patients and issuing ~120 prescriptions every day”. After six months, the number of patients had increased to >500 a day, ~60% of whom needed prescriptions. Soon afterwards, a network of consultation sites expanded to >1,000 facilities in 21 of Guangdong’s municipalities. In 2018, Beijing gave the legislative green light for internet hospitals, which prompted many Chinese digital health companies to start using internet-based AI solutions to meet the country’s medical and healthcare needs and contribute to the reduction of care gaps. By August 2021, >1,600 internet hospitals had been established in China. The public and physician acceptance of these and Beijing’s support for them suggests a new era in digital healthcare.

Internet + Healthcare” initiatives

Since 2018, a range of Internet + Healthcare” initiatives have consolidated and enhanced the position of digital healthcare innovations. The success and continual improvement of China’s digital health service platforms all benefit from Beijing’s policies to facilitate medical practice supported by digital tools. Laws and policies have been issued to support this digital transformation, including health data digitalization, data sharing, and interoperability across the whole of China’s healthcare ecosystem. After the outbreak of the COVID-19 pandemic, the government increased its “Internet + Healthcare” efforts to include telemedicine in state medical insurance coverage, and to lift barriers for prescribed drugs sold online.
Data advantage

Compared to the US and other Western democracies, China has significant data advantages to drive its digital healthcare initiatives. Eric Topol, a cardiologist, director of the Scripps Research Translational Institute, and author of Deep Medicine: How AI can make healthcare human again, argues that “China has a massive data advantage when it comes to medical AI research”. To put this in perspective, consider that Chinese patient healthcare data are drawn from the nation’s provinces, many of which have populations of >50m. By contrast, US AI research tends to be based on patient data often drawn from one hospital. China’s big data advantage allows machine learning algorithms to be more effectively trained to perform key functions in a range of clinical settings. Another comparative advantage of China is its large workforce of AI specialist, data scientists, and IT engineers, which can work on healthcare projects at comparatively low costs. This is partly the result of China’s emphasis over the past four decades to encourage science, technology, engineering, and mathematics (STEM subjects) in their schools and universities to fuel Beijing’s technological ambitions.

Not known for good data governance practices, but with intensions to expand internationally, China is now tightening its data protection regulations. For example, in November 2021 Beijing introduced the Personal Information Protection Law (PIPL), which is designed to prevent data hacks and other nefarious uses of sensitive personal information. Much like the EU’s General Data Protection Regulation (GDPR), the PIPL stipulates that an individual’s explicit consent must be obtained before their medical health data are collected, and it places the burden on medical AI companies to ensure that these data are secure.
2: Capabilities
Healthy China 2030

In October 2016, President Xi Jinping announced the nation’s Healthy China 2030 (HC 2030) blueprint, which put patient-centred healthcare at the core of Beijing’s healthcare plans, recognizing its ability to influence both social and economic development. The policy sets out China’s long-term approach to healthcare and shows the nation’s commitment to participate in global health governance, which Beijing recognises as necessary as it seeks to extend its international reach. By 2030, Beijing aims to reach health equity by embracing the United Nations’ Social Development Goal 3.8, which seeks to “Achieve universal health coverage, including financial risk protection, access to quality essential healthcare services and access to safe, effective, quality and affordable essential medicines and vaccines for all”. In 2019, Beijing announced an action plan to accelerate the delivery of Healthy China 2030. This puts patients first in an endeavour to build a healthy society by leveraging AI technologies to reduce the prevalence of lifestyle induced chronic disorders and subsequent care gaps. The World Health Organization (WHO) believes the policy “has the potential to reap huge benefits for the rest of the world”.
AI capabilities
As China’s economy has matured, its real GDP growth has slowed, from ~14% in 2007 to ~7% in 2018, and the International Monetary Fund (IMF) projects that growth will fall to ~5.5% by 2024. Beijing refers to the nation’s slower growth as the “new normal” and acknowledges the need to embrace a new economic model, which relies less on fixed investment and exporting, and more on private consumption, services, and innovation to drive economic growth. Such reforms are needed for China to avoid hitting what economists refer to as the “middle-income trap”. This is something many Western economies (and corporations) face: it is when countries achieve a certain economic level but then begin to experience diminishing economic growth rates because they are unable to effectively upgrade their economies with more advanced technologies. To avoid this scenario, for the past three decades, China has been investing in AI and systematically upgrading its economy.

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Leaning-in on digital and AI

Today, China has a significant supply of innovative AI talent to deliver a Healthy China by 2030. Some of the world’s largest technology companies are Chinese and all are developing different aspects of AI applications. For example, Alibaba’s cloud division concentrates on using AI in healthcare and Baidu, which has numerous AI research laboratories in the US, is focussed on a range of AI innovations, which include “deep learning”, and “big data”. More recently, Baidu added a Business Intelligence Lab, which develops data analytics for emerging data-intensive applications, and a Robotics and Autonomous Driving Lab, which specializes in computer vision.
In 2017 China's State Council launched a 3-step plan to become a world leader in AI technologies by 2030, with a domestic AI industry valued ~US$150bn. Beijing completed step 1 in 2020 by establishing a “new generation” of AI technologies and technocrats and developing national standards, policies, and ethics for its emerging industry. Step 2 is anticipated to be completed by 2025, by which time China expects to achieve “major breakthroughs” in AI applications that will help the completion of upgrading the nation’s industrial sector and thereby avoiding the middle-income trap. The final step is anticipated to take place between 2025 and 2030, which, among other things, will project China internationally as the world leader in AI technologies.
3: Understanding Beijing
Regulatory changes

A decade ago, foreign MedTechs operated in China with relative ease. Chinese regulations were lighter than they are today, and companies were supported by a multi-layered network of small scale and localised sub-distributors. This fragmented structure resulted in higher prices and tended to encourage corruption, but the relatively high margins obtained from foreign products allowed medical device corporations to compensate the multiple distribution levels and still make a profit. In return, domestic Chinese distributors managed the market and foreign MedTechs did not engage directly with hospitals and physicians.
Volume-based procurement

Recent regulatory changes have disrupted this modus operandi for foreign MedTechs. One change positioned to have a significant impact on MedTech profits is volume-based procurement (VBP). This is aimed at lowering the price of medical consumables by tendering the market volume of cities, provinces, or the country to manufacturers with the lowest price. Following a successful pilot with pharmaceuticals, VBP was extended to medical devices in 2019, and since then it has had a significant effect on certain products. For example, the price of cardio stents and hip and knee implants have been reduced by ~70% to ~90%. China’s message is clear: Medtechs are either ‘in’ with significantly lower prices, or ‘out’. This suggests that companies wishing to enter or grow their franchise in the Chinese market will have to adapt their business models by accelerating their pre-launch registrations and post-launch commercialization strategies for new products as margins on legacy offerings are expected to be substantially reduced. However, review processes for new offerings have become longer, more bureaucratic, and more expensive than they were five years ago. For example, if a Class 2 device without clinical studies took ~9 months to register five years ago, today expect ~2 years. VBP has forced foreign MedTechs to consolidate their multi-layered distribution channels to improve economies of scale. 
More recently Beijing has introduced a two-invoice policy for the medical devices industry: (i) MedTech to a distributor, and (ii) distributor to a hospital. This will push small and less competitive distributors out of the market and shorten and consolidate supply chains. The likely effect of this is for Chinese distributors to concentrate more on logistics to “deliver product”, rather than managing the market. To the extent that this is the case, a larger share of customer engagement will become the responsibility of MedTechs.
This will mean that foreign corporations trading in China will need to reassess their capabilities and adjust their business models. Further, MedTechs operating in China should expect VBP to increase the significance of “value”. This is because the policy is likely to enhance the purchasing power of hospital administrators and reduce that of physicians.  As a result, companies might expect procurement conversations to focus less on clinical outcomes and more on the overall value of products and their potential to minimize costs. Many readjustments companies will be obliged to make to their business models may be achieved by having someone local on the product management team rather than engaging high-margin agencies to resolve critical, but relatively simple domestic challenges.
A narrow window of opportunity for foreign MedTechs

Beijing’s “in China for China” policy makes it a condition that foreign companies entering the Chinese market must share their technology and intellectual property (IP) with a domestic “partner”. Beijing has been using this condition to acquire valuable scientific knowhow, which has helped the country to develop a large domestic medical device industry. According to a 2021 research report from Deloitte, a consulting firm, “China now boasts over 26,000 medical device manufacturers”. Beijing’s policies render China a substantially more challenging market to enter and to grow in than it was five years ago. China’s market opportunities for foreign corporations are not only getting tighter; they are getting shorter, and their orientation is changing away from surgeons towards patients. Further, Beijing is on a relentless drive towards self-reliance and tolerates the presence of Western companies in its domestic markets only for as long as they contribute offerings that are useful to the Chinese Communist Party. If China is successful in delivering on its healthcare and high-tech development plans, the window of opportunity for many foreign MedTechs could be only ~10 years.
China’s different

China and the Chinese are unlike the West and Westerners. When Deng Xiaoping’s started China’s reforms in 1978 and opened the nation to the world’s trading economies, he created a socialist market economy, in which private capitalists and entrepreneurs co-existed with public and collective enterprise. This formed the foundations for China’s phenomenal economic growth, prosperity, reduction of poverty, massive infrastructure investment, and development as a world-class technology innovator. As a result, many Western business leaders and politicians believed that China had abandoned ideology in a similar way that former communist regimes of Eastern Europe did in the early 1990s after the fall of the Soviet Union. However, such a transformation did not happen in China, which remains a one-party authoritarian state, tightly governed by the Chinese Communist Party (CCP), whose constitution states that China is a “people’s democratic dictatorship”. The CCP has a mission to become the world’s leading technology economy by 2030. This is backed by substantial sovereign wealth and a supply of relevant high tech human capital and an impressive history of national achievements.
Scale and speed of transformation

The phenomenal politico-economic progress China has made in a relatively short time is an indication of the nation’s determination, and its ability to affect change, and contextualizes Beijing’s policies to make China a self-reliant economy in the not-too-distant future. A 2022 report jointly released by China’s Development Research Center and the World Bank highlights the nation’s transformation in just four decades, from a struggling agrarian society to a global superpower. The nation’s achievements include increased health insurance coverage to >95% of its 1.4bn population, lifting ~0.8bn people out of poverty, which accounts for ~75% of global poverty reduction in the same period, a burgeoning middle class, which by 2030, will have grown from today’s ~0.3bn to ~0.7bn. In 2010, China overtook Japan to become the world's second largest economic power after the US when measured by nominal GDP. According to the World Bank, in 1960, China's GDP was ~11% of the US, and in 2019, ~67%. Not only is China the world's second-largest economy it has a permanent seat at the United Nations Security Council, modernised armed forces, and an ambitious space programme. China’s growing international clout and economic leadership positions it well to replace the US as the greatest superpower.

Such factors provide a context for Western corporation with global pretentions wishing to engage with and learn from China. At the 13th Annual National People’s Congress in March 2022, Premier Li Keqiang called for “faster breakthroughs” in key technologies, and said the government would increase the tax rebate for small and medium-sized science and technology firms from 75% to 100% and grant tax breaks for basic research to encourage innovation. Significantly, the Congress also underscored self-reliance in China’s economic priorities amid warnings of trade headwinds and geopolitical complexities.

China is too big a commercial opportunity to ignore. In 2021, China accounted for >18% of the global economy, rising from ~11% in 2012, its GDP was ~US$18trn, and per capita GDP reached US$12,500, which is close to the threshold for high income economies. In recent times, the contribution of China's economic growth to the world economy has been ~30%, which makes China the largest growth engine for the global economy. However, the relationship between China and the rest of the world is changing. As China becomes more self-reliant, its exposure to the world has decreased. Add to this (i) international trade disputes, (ii) increasing geopolitical tensions between the US and China, (iii) the nation’s evolving new rules to evaluate technology flows, (iv) increase of protectionism and (v) its healthcare mission to pivot towards patients, and you have significantly changed trading conditions than a decade ago. Misjudging Beijing’s rapidly evolving commercial ecosystem could be costly for Western MedTechs.
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  • Digital therapeutics and artificial intelligence (AI) techniques are increasing their influence on the medical devices industry and fuelling a shift of healthcare away from hospitals into peoples’ homes
  • This poses a challenge to traditional medical device companies (MedTechs) that solely focus on manufacturing physical devices for hospital-based episodic interventions
  • Some MedTechs are changing their business models and strategies, diverting their focus to patients, and adding digital therapeutic applications to their legacy offerings
  • Zimmer-Biomet and Stryker are MedTechs that have embraced digital therapeutics and AI
  • Stryker’s CEO advises other MedTechs to ‘lean-in on AI and don’t be sceptical’
Leaning-in on digital and AI
Rapidly growing digital therapeutic technologies are disrupting hospital-based healthcare and posing a challenge to those medical device companies that are slow to complement their legacy physical product offerings with patient centric digital solutions. Such technologies have the potential to enhance patient outcomes, reduce healthcare costs, and give providers access to new revenue streams. Today, digital solutions increasingly contribute to the prevention, management, and treatment of a wide range of diseases and health conditions. Their rapid growth is driven by advances in the behavioural sciences, artificial intelligence (AI) techniques and the increase in the consumer health wearables market, which is converging with the regulated medical devices market. This convergence facilitates care to move away from hospitals and into peoples’ homes.
In this Commentary
This Commentary describes how two decades ago a world-renowned surgeon and CEO of a large hospital group warned that digital therapeutics would disrupt healthcare and push a lot of hospital-based care to peoples’ homes. For years the medical devices industry did not pay too much attention to such warnings and continued to focus on manufacturing physical products for surgeons in hospitals. The Commentary describes two leading MedTechs - Zimmer-Biomet and Stryker – which have recently begun to reinvent themselves and embrace digital therapeutics and AI techniques expected to improve patient outcomes and reduce surgical inconsistencies. We briefly develop this thought process by suggesting how machine learning AI techniques might be employed to reduce the high failure rates of spinal surgeries. The Commentary describes the large and growing global market for digital therapeutics and prescription digital therapeutics, a large proportion of which are enabled by wearables and telehealth. The market for digital therapeutics is large enough and growing fast enough to pose a threat to traditional medical device companies that solely manufacture physical offerings and fail to develop digital solutions to improve patient journeys. Although some MedTechs neither have the resources nor the mindsets to develop digital solutions, it seems reasonable to suggest that, in the medium term, they will be obliged to acquire or develop such assets to remain competitive. However, achieving this will be challenging.
Early warnings of change

Over a decade ago, Devi Shetty, warned health professionals to prepare for care to become heavily influenced by digital therapeutics, which he argued would move a significant portion of care away from hospitals and into peoples’ homes. This warning had resonance because Shetty is a surgeon as well as being the founder and executive director of Narayana Health, one of India’s largest hospital groups. In an interview with HealthPad in 2012 he suggested that hospitals were becoming less relevant in a new, and rapidly growing digitally driven healthcare ecosystem. “Healthcare of the future will be dramatically different to that of the past. The future is not an extension of the past. In the future, chronic illnesses will be treated at home”, said Shetty and continued,The next big thing in healthcare is not going to be a magic pill, a faster scanner, or a new operation. It’s going to be digital therapeutics, which will dramatically change the way health professionals interact with patients. Every step of a patient’s care journey will be informed by software. This will make healthcare safer for the patient and shift most of hospital activities to the home. If a physician doesn’t have to operate on a patient, the patient can be anywhere, distance doesn’t matter”. Shetty repeated this argument at a 2022 Microsoft ‘Future Ready’ conference suggesting that, “95% of people who are unwell, don’t need an operation. All they need is medical intervention, which can be enabled by digital technology and telehealth and treated in the home”.
Leading MedTech companies reinventing themselves
Two decades after Shetty’s warning, the CEOs of Zimmer-Biomet and Stryker, respectively Bryan Hanson, and Kevin Lobo, have made substantial commitments to digital therapeutic solutions that improve patient outcomes, reduce surgical inconsistencies and extend treatment and monitoring to the entirety of patients’ journeys, much of which takes place in patients' homes. Medical device companies that fail to develop software solutions or link-up with providers of such technologies could risk losing market share to emerging competitors.

Zimmer-Biomet and digital therapeutics

Zimmer is a player in total knee arthroplasties, which involve replacing the knee joint with a prosthetic device that carries out similar functions as a person’s own knee. The surgery has become routine. In 2020, US physicians carried out ~1m total knee arthroplasties, and by 2030, ~2m such procedures are expected to be carried out annually in the US. In 2020, the global total knee replacement market was valued at ~US$7.8bn, expected to grow at a CAGR of >6%, and reach ~US$12.5bn by 2027.

In 2021, Zimmer and Canary Medical, a software company, which had developed an implantable digital therapeutic application, received approval from the US Food and Drug Administration (FDA) to market Persona IQ: the world’s first ‘intelligent’ total knee replacement. Zimmer’s traditional knee prosthesis is embedded with Canary’s technology to provide a range of automatic, reliable, and accurate data and analyses that facilitates remote monitoring and tracking of patients' post-operative progress long after they have left hospital.  Following this success, Hanson is directing a substantial percentage of Zimmer’s R&D spend on the development of digital therapeutic solutions, and Persona IQ is expected to be the first in a pipeline of intelligent joint prostheses.

Stryker and digital therapeutics

In a March 2022 interview, Stryker’s CEO, Kevin Lobo, stressed his ongoing commitment to increase his company’s digital therapeutic and AI capabilities. In 2021 Stryker acquired Gauss Surgical, which had developed Triton™, an AI-enabled app for real-time monitoring of blood loss during surgery. “After a mother gives birth”, says Lobo “it’s important to calculate how much blood she’s lost. Today, this quantification is very crude and rudimentary. Triton™ allows you to use your smartphone to accurately measure the amount of blood that is in sponges as well as cannisters. It can distinguish between different liquids and measure only the haemoglobin. This is critical to determining whether a mother needs a transfusion or not. You would be shocked, even here in the US, how often a mother doesn’t get a transfusion she needs or gets one she doesn’t need”.

In January 2022, Stryker acquired Vocera Communications for ~US$3bn. Vocera is a US Nasdaq traded company founded in 2000 that makes wireless communications systems for healthcare and has developed a digital platform, which helps connect caregivers and "disparate data-generating medical devices". The platform is used by >2,300 facilities throughout the world, including ~1,900 hospitals. Interoperability between the platform and >150 clinical and operational systems reduce health risks and enhance the consistency of surgical procedures, speeds up staff response times; and improves patient outcomes, safety, and affordability. According to Lobo, "Vocera will help Stryker significantly accelerate our digital therapeutic aspirations to improve the lives of caregivers and patients".

Lobo has made AI a shared service. Stryker employs ~200 software engineers that are using AI. “This we never had before at Stryker. AI is going to be a central core competence for our company. I can see that all our business units are going to be using AI within the next two to three years”, says Lobo, who expects AI inspired digital therapeutic applications to “lead to more consistent outcomes for our procedures”. According to Lobo this is “a big deal because today there are a lot of variations in surgical outcomes”.

AI and its potential impact on spinal surgery

Spinal surgery is a good example of significant inconsistencies in outcomes. Each year, ~7.6m spinal surgeries are performed globally, and ~1.2m in the US, where spinal fusions account for ~60% of all procedures. Although ~50% of primary spinal surgeries are successful,  ~30%, ~15%, and ~5% of patients only experience a successful outcome after the second, third, and fourth surgeries, respectively. Machine learning AI techniques applied to patients’ electronic medical records (EMR) and clinical data could potentially reduce this high failure rate by predicting what product and surgical procedure could produce an optimal solution for individual patients.
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Robotic surgical spine systems, China, and machine learning
Let us briefly explain. Machine learning, a subfield of AI, is the capability of a machine to imitate intelligent human behaviour. It is the process of using mathematical models of data to help a computer to learn and adapt without following explicit human instructions. Machine learning employs algorithms (a set of instructions for solving a problem) to identify patterns in large data sets, potentially comprised of multiple sources, and then uses these patterns to create a predictive model. With increased training on more data, the results of a machine learning algorithm may become more accurate, much like how humans improve with practice. Once this point is reached, regulatory approval for the algorithm can be applied for under the FDA’s category of “software as a medical device”. Once approved, the algorithm may be used to help reduce the high failure rates of spinal surgery.
The digitalization of healthcare
MedTech leaders should be mindful of the impact that digital therapeutics is having on their industry, which goes far beyond embedding legacy physical offerings with sensors. Digital therapeutics is a rapidly growing healthcare modality, predicated upon scientific advances in the behavioural sciences and AI techniques, that help individuals to form habits, which improve their health, reduce healthcare costs and boosts productivity. Such software tools increasingly are used for the management and prevention of a range of debilitating and costly chronic conditions, including mental health challenges, substance abuse disorders, opioid-induced conditions, cancer, cardiovascular diseases, metabolic disorders, respiratory conditions, and inflammatory diseases. Chronic disease is a public health emergency. In the US, six in ten citizens are living with at least one chronic disorder. Not only are such conditions the leading cause of hospitalizations, disability, and death, but their total annual cost to the US exchequer, which includes lost economic productivity, is ~US$3.7trn.
The market for digital therapeutics is driven by a combination of different factors, including: technological advances, particularly consumer wearables (such as the Apple Watch and Fitbit apps, see below), the high penetration levels of mobile telephony, the growth of telehealth, the increasing demand from consumers to take more control of their health, aging populations, the large and escalating incidence of preventable chronic diseases, the need to control healthcare costs, and rising investments in digital therapeutics. According to Statista, a business data platform, in 2021 the number of people globally using digital therapeutic applications reached ~44m. Almost double the number of 2020. By 2025 the number of users is expected to reach >362m, and this only includes devices that have sought validation in clinical trials. The global digital therapeutics market is growing at a CAGR of ~31% and is projected to reach ~US$13bn by 2026, up from ~US$3.4bn in 2021.
An advantage of digital health modalities is their ability to deliver continuous personalized care and bridge large care gaps created by shortages of specialized health professionals. In the US, for instance, there are ~6,500 specialist physicians in full-time clinical practice to treat diabetes (endocrinologists), but there are ~27m Americans living with the condition. Similar health gaps occur in other common disease states. In developing economies, care gaps are even wider. For example, India has a chronic shortage of doctors and nurses and has ~77m people living with diabetes and ~55m people living with cardiovascular disease. The latter kills ~5m Indian citizens each year. India, like many other Asian countries, has chosen to deal with care gaps by establishing itself as a major presence in the digital health economy. By several key metrices, from internet connections to app downloads, both the volume and the growth of India’s digital economy now exceeds those of most other countries. Expect this shift to increasingly influence corporations looking to enter and extend their franchises in large and rapidly growing medical devices markets in developing economies. 

Cybersecurity challenges

Headwinds for digital therapeutic applications, particularly in Western democracies, include challenges of informed consent to use, safety and transparency, algorithmic fairness and biases, and data privacy. Digital therapeutic applications tend to be more vulnerable to cyberattacks than traditional medical devices, which are manufactured according to strict protocols by a handful of regulated manufacturing partners. By contrast, digital applications often rely on third-party software, which may be less rigorous than the usual medical device standards. Cybersecurity threats to digital therapeutics include data theft, identity disclosure, illegally accessing data, corruption of data, loss of data, and violation of data protection. These risks are accentuated by the fact that the modality is predicated upon the continuous monitoring of patients’ vital signs and increased connectivity between physicians, providers, payers, and patients and breaches can occur at various points along the path of data movement. Risk mitigation includes encryption protocols and the ability to control data access and data integrity. An indication of how quickly the US policy environment around cybersecurity is changing is in March 2022, the US Senate unanimously passed legislation, which would usher in sweeping changes to the federal legal landscape relating to cybersecurity and mandate companies to report damaging hacks and ransomware payments to the government.
Prescription digital therapeutics

Another indication of the growing significance of digital therapeutics is a recent US policy push to establish an equivalence between some wearable healthcare solutions and prescription drugs and medical devices. On 10 March 2022, two US senators, Catherine Cortez Masto, D-Nevada, and Todd Young, R-Indiana, introduced legislation to expand Medicare and Medicaid coverage to include prescription digital therapeutics. Medicare is a federally run US medical insurance programme covering ~64m citizens >65 and younger disabled people. Medicaid is a government assistance programme, funded by both federal and state governments, but run by individual states and covers the medical expenses of ~75m Americans on low incomes and with limited resources. This is significant because of the vast number of individuals covered by these health insurances and the fact that the US regulatory hurdle is one of the toughest in the world. Prescription digital therapeutics fall under the FDA category of “software as a medical device” and are subject to the same stringent requirements as drugs and medical devices, and must demonstrate evidence of clinical effectiveness, safety, and quality. After that they require a prescription for use, following a consultation with a doctor.
The bill would standardize US reimbursement codings for prescription digital therapeutics, which is expected to incentivize American doctors to increase prescribing them. This would not only facilitate greater access to a wide range of digital therapies for >44% of Americans receiving state healthcare support but potentially create a precedent for US private health insurance companies to increase their coverage of prescription digital therapeutics. This would significantly help to propel the modality into mainstream healthcare.

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The future of health wearables

In June 2020, as the COVID-19 crisis escalated, the FDA expanded its guidance for non-invasive patient-monitoring technologies, including the Apple Watch’s ECG function. In 2021, ~34m Apple Watches were sold worldwide; up from ~22.5m in 2018. In addition to smartwatches, there is a wide range of intelligent wearables that monitor your vital signs in real time, promote self-management of chronic conditions, help people to engage with their own health and incentivize them to change their behaviour to improve their health and lifestyles. Thus, digital therapeutic applications have the potential, among other things, to slow the development of chronic disorders and reduce hospital visits and readmissions. The size and growth rate of the wearable health technology market influences the decisions of insurers, employers, health providers and producers. For example, insurers use data from wearables to adjust their premiums,  corporates derive benefits from their employees using wearables, which include healthier company cultures, a reduction in employee turnover, an increase in workplace safety and enhanced efficiency.  
In the US, consumers' use of wearables increased from 9% to 33% in four years as of 2021. The use of wearables is likely to increase as they become more conventional, connectivity expands, and more accurate sensors are developed. Such developments are likely to provide further incentives for insurers and employers to use wearables to develop healthier lifestyles to boost profitability and cut costs. According to Gartner, a technological research and consulting firm, in 2021 worldwide user spending on wearable devices was ~ US$82bn, ~18% increase from the previous year. This seems reflective of consumers, encouraged by the COVID-19 pandemic, becoming more conscious about their health, wellbeing, and changes to their lifestyles. According to a 2021 Deloitte’s survey, ~58% of US households own a smartwatch or fitness tracker, and ~39% of Americans personally own a smartwatch or fitness tracker. ~14% of consumers have bought their fitness devices since the start of the COVID pandemic in 2020, and activities such as counting steps, workout performance, heart health, and sleep quality monitoring are amongst the most popular activities.

Another factor driving the shift of care away from hospitals to peoples’ homes is the development of telehealth. The COVID-19 pandemic caused telehealth usage to surge as consumers and providers sought ways to safely access and deliver healthcare. According to the US Centers for Disease Control and Prevention (CDC), by late March 2020, telehealth had increased >154% compared to the same period in 2019.  Since the peak of the COVID-19 pandemic, telehealth has become a permanent part in the delivery of healthcare. The telehealth market is expected to rise to >US$397bn by 2027 from US$42bn in 2019. According to Devi Shetty the history of healthcare will be written in two sections, BC, and AC: before COVID and after COVID.COVID-19 disrupted and transformed healthcare and forced inward looking healthcare professionals to rapidly change and adopt digital therapeutic technologies”, says Shetty.
The legacy of the COVID-19 related surge in digital therapeutics is an opportunity to make permanent hybrid care modalities created during the pandemic. The foundations for the opportunity are described in a 2021 McKinsey research report, which suggests that the pandemic, (i) accelerated the growth and acceptance of telehealth, which “stabilized at ~38X higher than before the crisis”, (ii) improved the attitudes of consumers and providers towards telehealth, (iii) made permanent some regulatory changes put in place during the pandemic (for example, Medicare and Medicaid’s expansion of reimbursable telehealth codes introduced in 2021 for US physician fee schedules, which have been made permanent), (iv) fuelled venture capital’s digital health investments, and (v) drove the adoption of digital therapeutics across a wide range of disease states. 
Shift in mindset

In the changing healthcare ecosystem, a primary strategic objective for MedTech leaders is to define relevant planning cycles and efficaciously manage from one cycle to the next. The current planning cycle in the medical devices industry is influenced by data, AI techniques, and patient centric digital therapeutic solutions. To effectively manage this cycle, MedTechs might consider copying Zimmer and Stryker and acquire complementary digital therapeutic assets and capabilities. Adapting M&A knowhow and experience to make such acquisitions is an option but not without risk.
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MedTech must digitize to remain relevant
This is because enterprises with digital assets and capabilities have different cultures, development practices, reimbursement policies and data management policies and practices compared to traditional medical device companies. It seems reasonable to suggest that poorly managed acquisitions could result in MedTechs ending up with a graveyard of unfulfilled digital technologies. To reduce this risk industry leaders might consider following Stryker’s example and recruit experienced digital and AI specialists, and make them a core competence.

In the near-term, disruptive digital technologies present both challenges and opportunities for medical device companies. Zimmer and Stryker have started to reinvent themselves through parallel efforts to digitize their legacy businesses, acquire complementary digital assets, and make AI a core competence. However, many MedTechs have not changed their business models and still focus R&D on making small improvements to existing product offerings. Corporate leaders considering changing their business models and strategies should be mindful that digital and AI assets and capabilities with the potential to create disruptive growth need to be protected from unnecessary bureaucratic burdens common in many traditional companies. To survive and prosper, managers might consider rethinking their operating models for innovation-led growth. The most effective models appear to combine a strategic process with multiple mechanisms for driving innovation development and scale-up. Stryker’s shared service of AI expertise is one example of a contrived core “capability” expected to transform legacy devices into growth engines that could help secure the company’s long-term survival. MedTech CEOs might do well to follow Lobo’s advice and, “lean-in on AI and do not be sceptical.”.
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  • A wind of change is blowing through MedTech markets
  • MedTech markets have matured and are experiencing slower growth and increased competition, which have fuelled endeavours to increase growth rates
  • Artificial intelligence (AI) techniques applied to data from existing devices have the potential to achieve this and improve care
  • Obstacles to developing AI solutions include rigid manufacturing mindsets and a dearth of appropriate talent
  • To remain relevant MedTech leaders will need to “think beyond physical products”, develop new business models, new types of investments and new approaches to R&D
  • Will a wind of change that is blowing through MedTech markets be perceived as a temporary breeze?
A prescription for an AI inspired MedTech industry
Thinking beyond physical products and the growing significance of AI in MedTech markets

A wind of change is blowing through MedTech markets, which has prompted some key opinion leaders to think beyond physical products and begin to use artificial intelligence (AI) techniques to develop value added services that bolt-on to their existing physical offerings to improve clinical care and economic efficiencies while providing access to new revenue streams.

Bryan Hanson, Zimmer-Biomet’s CEO, recently suggested that >70% of his company’s R&D spend is now being invested in data informatics and robotics. Not far behind is Stryker, another global orthopaedic corporation, which has implemented AI strategies to improve care and differentiate its offerings. Both are thinking beyond their physical products to create a suite of services derived from AI enhanced data collected from their existing devices. Such actions provide a template that can be copied by other enterprises. How long will it take for AI solutions to represent a significant percentage of MedTechs’ revenues?

In this Commentary

This Commentary: (i) describes the growing significance of AI, (ii) explains the difference between data mining, AI, and machine learning, (iii) illustrates AI technologies that have become an accepted part of our everyday lives, (iv) highlights technical drivers of AI solutions, (v) describes obstacles to the development of AI systems, (vi) indicates how such obstacles may be reduced, (vii) describes Zimmer’s and Stryker’s AI driven data initiatives, (viii) suggests that the Zimmer-Stryker AI template has broad potential, (ix) suggests that AI systems can breathe life into 'dead data', (x) provides an example of a company at the intersection of medical information and AI techniques, (xi) describes the origins of the phrase, ‘wind of change’, and defines the ‘winds’ driving change in current MedTech markets, (xii) reports that ~80% of B2B sales in the economy generally are digitally driven, (xiii) provides some reasons for MedTechs’ slow adoption of AI systems, (xiv) floats the idea that the future for producers is to partner with tech savvy start-ups and (xv) describes how US AI supremacy is being challenged.
AI: vast and fast growing
It is challenging for baby boomers and older millennials, who populate MedTechs’ C suites, to fully grasp the potential of AI. This is largely because their corporate careers were underway before the digital age started, and for three decades they have personally prospered from manufacturing physical devices without the help of AI.
A person who understands the potential of AI is Sundar Pichai, the CEO of Alphabet, one of the world’s largest tech companies. In a recent BBC interview Pichai suggested, "AI is the most profound technology that humanity will ever develop and work on . . .  If you think about fire or electricity or the Internet, it's like that, but even more profound". This suggests that Hanson is right to redirect Zimmer’s R&D spend towards AI-driven solutions. A February 2021 report from the International Data Corporation (IDC), a market intelligence firm, suggests that the current global AI market is growing at a compound annual growth rate (CAGR) of ~17% and is projected to reach ~US$554bn by 2024.
Data mining, AI, machine learning and neural networks

Among MedTechs’ C suites there is some confusion about data strategies and AI solutions. Many enterprises use data mining techniques on existing large datasets to search for patterns and trends that cannot be found using simple analysis. They employ the outcomes to increase revenues, cut costs, improve customer relationships, reduce risks and more. Although data mining is commonly used when working on AI projects, in of itself, it is not AI. So, let us briefly clarify.

AI is the science and engineering of developing intelligent computer programs to enable machines to provide requested information, supply analysis, or trigger events based on findings. AI creates machines that think, learn, and solve problems better and faster than humans. This is different to traditional computing, where coders provide computers with exact inputs, outputs, and logic. By contrast, AI systems can be “schooled” to carry out specific tasks without being programmed to do so. This is referred to as machine learning, which usually requires large amounts of data to train algorithms [mathematical rules to solve recurrent problems].

A critical element of machine learning’s success is neural networks, which is an AI technique modelled on the human brain that is capable of learning and improving over time. Neural networks are comprised of interconnected algorithms that share data and are trained by triaging those data: a process referred to as ‘back propagation. In healthcare, machine learning outputs range from the ability to recognise images faster and more accurately than health professionals to making in vivo diagnoses.

AI systems have become an accepted part of our everyday lives without us realising it
Most people are aware of significant AI breakthroughs such as self-driving cars and IBM’s Watson computer winning the US quiz show Jeopardy by beating two of the best players the show had produced. Lesser known, is in 2012, AlexNet, a neural network learning system, won a large-scale visual recognition contest, which previously was thought too complex for any machine. In 2016, Google’s AlphaGo, a machine learning algorithm, defeated Lee Sedol, who was widely considered the world’s greatest ever player of the ancient Chinese game Go. Most observers believed it would be >10 years before an AI programme would defeat a seasoned Go champion. Although Go’s rules are simple, the game is deceptively complex, significantly more so than chess. It has a staggering 10170 possible moves, which is more than the number of atoms known in the universe. Significantly, machine learning algorithms embedded in AlphaGo, mastered the game without any prior knowledge and without any human input. More recently Google launched AlphaGo Zero, an AI system, which can play random games against itself and learn from it. During the decade of these breakthroughs, AI systems became an accepted part of our everyday lives without us realising it. Examples include, Google searches, GPS navigation, facial recognition, recommendations for products and services, bank loans we receive, insurance premiums we are charged, and chatbots, which organizations use to provide us with information.
Technical drivers of AI systems

In addition to commercial drivers, AI techniques are driven by easy availability of data, an explosion in computing power and the increased use of clusters of graphic processing units (GPUs) to train machine-learning systems. These clusters, which are widely available as cloud services over the Internet, facilitate the training of more powerful machine-learning models. An example is Google's Tensor Processing Unit (TPU), which has the capability to carry out more than one hundred thousand trillion floating-point operations per second (100 petaflops). This has the potential to accelerate the rate at which machine-learning models can be trained. Further, the cloud has made data storage and recovery easier, which has motivated government agencies and healthcare institutions to build vast unstructured data sets that they make accessible to researchers throughout the world to stimulate innovation.
Obstacles to the development of AI systems
So far, we have emphasised the benefits of AI, but there are concerns that machine intelligence will accelerate at an incomprehensible rate, surpass human intelligence, and transform our reality. This is referred to as “singularity”, which has generated concerns from key opinion leaders. Nearly a decade ago, Stephen Hawking, a pre-eminent British scientist, warned in a BBC interview, that singularitycould spell the end of the human race”. More recently, Hawking’s view has been echoed by Elon Musk, founder, and CEO of Tesla and SpaceX, who suggests that AI is, “more dangerous than nuclear warheads and poses a fundamental risk to the existence of human civilization". Musk has called for stronger regulatory oversight of AI, and more responsible research into mitigating its downsides. In 2015, he set up OpenAI, a non-profit research organization, with a mission to promote and develop AI systems that benefit society. 


In the June 2018 edition of the Atlantic Review, Henry Kissinger, who served as national security adviser and secretary of state for two US Presidents, described the potential harms from AI by addressing the question: “What would be the impact on history of self-learning machines that acquired knowledge by processes particular to themselves, and applied that knowledge to ends for which there may be no category of human understanding?”. Singularity might be more imminent than once thought. In a book published in 2015, futurist Ray Kurzweil predicted that singularity would occur in ~2045, but a paper published in the June 2020 edition of the International Journal of Astrobiology suggests that it is more likely to occur within the next decade.

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Robotic surgical spine systems, China, and machine learning

Overcoming obstacles to AI
In clinical settings there are growing concerns that complex algorithms can blur the reasoning behind specific machine interpretations and consequent actions of robotic surgical systems. As AI and machine learning develop so surgical robots are expected to become more autonomous and have the capability to make instantaneous diagnoses and pursue immediate therapies, which surgeons using the systems do not fully understand. The failure of humans to understand the workings of an AI system is referred to as an “interpretability challenge”, or more commonly, the black-box” problem, which could impact future clinical regulations.
Combatting the possible dangers of AI systems not being understood by humans is a relatively new and growing research area, referred to as Explainable AI” (XAI). XAI attempts to use AI techniques to develop solutions that can describe the intent, reasoning, and decision-making processes of complex AI systems in a manner that humans can understand. This could provide Stryker and Zimmer, and other manufacturers, a solution to potential future regulatory obstacles associated with advances in their robotic surgical systems
Zimmer’s and Stryker’s initiatives

In August 2021, the FDA granted De Novo marketing authorization [applicable for a new and novel device whose type has not previously been classified] for a “smart knee”, which Zimmer had developed in partnership with Canary Medical, a data analytics company. The device, called Persona IQ®, is the world's first and only smart knee cleared by the FDA for total knee replacement surgery. It combines Zimmer’s proven and trusted knee implant, Persona® The Personalized Knee®, with Canary’s proprietary sensor technology, which provides real-time feedback on how surgical implants and devices are working by generating self-reports on patient activity, recovery, and treatment failures, without the need for physician intervention and dependence upon patient compliance. The partnership is also expected to leverage Canary’s machine learning capabilities to identify further patterns in data from implants that could help clinicians catch problems, such as infections or loosening of the implants before they worsen. Persona IQ® will work together with Zimmer’s remote care management platform, mymobility® with Apple Watch®, as well as with other components of the  ZBEdge™ connected intelligence suite of currently available, and soon to be launched, digital and robotic technologies engineered to deliver transformative data-powered clinical insights, shared seamlessly across the patient journey, to improve patient outcomes. 

In January 2021, Stryker acquired OrthoSensor, a privately held technology company that makes intraoperative sensors for use in total joint replacements. Stryker expects these sensors to empower surgeons with AI-driven solutions and enhance its surgical robotic systems by eventually providing them with the capability to predict surgical outcomes. Additionally, OrthoSensor’s remote patient monitoring wearables, combined with a cloud-based data platform, are expected to significantly improve Stryker’s data analytics capabilities. According to a Stryker press release issued at the time of the acquisition, “OrthoSensor quantifies orthopaedics through intelligent devices and data services that allow surgeons and hospitals to deliver evidence-based treatments for all healthcare stakeholders. The company’s advancements in sensor technology, coupled with expanded data analytics and increasing computational power, will strengthen the foundation of Stryker’s digital ecosystem”.
The Zimmer-Stryker AI template has potential across MedTech

Despite Zimmer’s and Stryker’s AI-driven data initiatives to improve their respective competitive advantages and gain access to new revenue streams, few MedTechs collect, and store the data produced by their existing devices, and even fewer use such data to provide novel AI solutions. The Zimmer-Stryker template for achieving this is not limited to orthopaedics. For example, consider neuro critical care and traumatic brain injuries (TBI), which are a “silent epidemic”. Each year, globally ~69m individuals sustain TBIs. In the US, every 15 seconds, someone suffers a TBI. In England, ~1.4m people present at A&E departments each year following a head injury.

Despite extensive research, successful drug therapies for TBI have proven to be elusive. The gold standard management of the condition is to monitor intracranial pressure (ICP) and attempt to avoid elevated levels, which can cause further insults to an already damaged brain. Currently, there are no FDA approved means to identify advance warnings of changes in ICP. However, it might be possible to create an early warning of ICP crises by applying machine learning algorithms to standard physiological data produced by existing medical devices commonly used to monitor patients with TBI. This would not only provide time for interventions to prevent further trauma to critically ill patients but would also give producers access to new revenue streams.

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Breathing life into dead data

There are potentially limitless opportunities to improve care by breathing life into 'dead data'. This can be achieved simply by applying AI solutions to underutilized data from existing medical devices. The global MedTech industry is comprised of ~6,000 companies (mostly small to medium size). The overwhelming majority of these manufacture devices that produce, or could produce, patient data. These companies serve ~14 surgical specialisms each of which treat numerous conditions. For each condition there are millions of patients at any one time. For each patient, multiple devices used in therapies display real time data. Most producers are awash with dead data because they do not collect, store, and analyse these data to improve the quality of care. AI systems can change this.
A MedTech start-up at the intersection of medical information and AI techniques

A start-up, which understands the clinical and economic potential from the intersection of medical data and AI solutions is Komodo Health, which was founded in 2014. According to Web Sun, the company’s co-founder, and president, “We had a vision that integrating robust data with software solutions was the way forward for healthcare at a time when no one was doing this”. Komodo has created an AI platform, which it refers to as a "healthcare map", comprised of large-scale anonymous health outcome data from hundreds of sources.

In January 2020, Komodo announced a deal to import Blue Health Intelligence’s patient data onto its platform. Blue Health provides US healthcare claims data and actionable analytics to payers, employers, brokers, and healthcare services. The combined database charts >325m individual patient care journeys through tests and therapies at hospitals and clinics. In March 2021, Komodo raised US$220m to extend its platform to offer real-time assessments of patients’ healthcare journeys to detect disparities in the quality of care and outcomes, and to provide a basis for interventions aimed at improving outcomes and lowering costs.

The ability to introduce clinical insights into enterprise workflows potentially helps producers and providers close gaps in care journeys and address unmet patient needs. Not only are Komodo’s services designed to deliver timely interventions and alerts to improve care, but the company also records and reports the performance of specific medical products on patient cohorts. These data provide a basis to develop and market further innovative healthcare services, and novel therapeutics, which are expected to boost Komodo’s revenues.

A wind of change

We borrowed the ‘wind of change’ phrase used in our introduction from a famous speech made by British Prime Minister Harold Macmillan to the Parliament of South Africa on 3 February 1960 in Cape Town. Macmillan was referring to a system of institutionalised racial segregation, called Apartheid, which enforced racial discrimination against non-Whites, mainly predicated on skin colour and facial features. Despite the UK Prime Minister’s belief that in 1960, the days of White supremacy in South Africa were numbered, it took >30 years before Apartheid was ended and Nelson Mandela was inaugurated as the first Black President of South Africa on 10 May 1994. Mandela was an anti-apartheid activist and lawyer, who had spent 27 years as a political prisoner under the Apartheid regime.

A wind of change is now blowing through MedTech markets. In less than a decade, healthcare will be faced with significantly more patients, more data, more technology, more costs, more competition, and less money for producers and providers. Over the past five years, US providers’ profit margins have fallen, in Europe the gap between public health expenditure and government budgets has increased, and throughout the world healthcare systems are under budget pressure and actively managing their costs. With such strong headwinds, a sustainable future for MedTechs might be to reduce their emphasis on manufactured products distributed through labour intensive sales channels and increase their AI service offerings using data from their existing devices. Over the past five years AI solutions have become more prolific, easier to deploy, and increasingly sophisticated at doing what health professionals do, but more efficiently, more quickly and at a lower cost.  

~80% of B2B sales are digital

In addition to AI solutions being used to improve clinical outcomes, they can be employed to enhance business efficiencies. A previous Commentary described how AI systems can help to transform traditional labour intensive MedTech supply chains and personalise sales. A recent study undertaken by Gartner, a global research and advisory firm, suggests that, “Over the next five years, an exponential rise in digital interactions between buyers and suppliers will break traditional sales models, and by 2025, ~80% of B2B sales will occur in digital channels”. Giant tech companies are taking advantage of this to enter healthcare markets, MedTechs have been slow to implement such changes despite the boost in online engagements provided by the COVID-19 pandemic.
Reasons for slow adoption of AI systems

So, why are MedTechs slow to implement AI solutions to enhance clinical outcomes and improve economic efficiencies? Over ~3 decades they have achieved double-digit revenue growth from manufacturing physical devices and marketing them through labour intensive channels in a few wealthy regions of the world with relatively benign reimbursement policies. During this period of rapid growth and commercial success, MedTechs have not been required to confront data issues, bridge the science, technology, engineering, and mathematics (STEM) skills gap, and commit to new structures, new processes, new behaviours, and new aptitudes.
This suggests that despite a wind of change, now blowing through MedTech markets and challenging traditional business models and strategies, it could be perceived as a 'temporary breeze' and nothing will change. However, a step change in the direction of more AI solutions might occur when digital natives [people who have grown up in a digital age] replace digital immigrants [people whose careers were well underway before the onset of the digital age] in MedTechs’ C suites. According to a Gartner executive, “As baby boomers retire and millennials mature into key decision-making positions, a digital-first buying posture will become the norm. . . . . . Sales reps will need to embrace new tools and channels, as well as a new manner of engaging customers, matching their sales activity to their customers’ buying practices and information collecting needs”. A 2019 research report from the Boston Consulting Group (BCG), suggests that companies, which use AI systems to personalise sales can expect productivity gains of ~10%, and incremental revenue growth of ~10%.
Partnering with tech savvy start ups

Currently, many MedTechs neither have the mindsets nor the in-house STEM capabilities to create AI enhanced services. So, what might be a way forward? STEM skills, although scarce, tend to reside in people <30. Although there are ~68m of these people in the US, people with STEM skills tend to prefer to work either for giant tech companies or tech start-ups devoted to leveraging the potential of AI. Giant tech companies and start-ups are outside the comfort zones of most MedTechs. However, in the future, they may be obliged to partner with tech savvy start-ups engaged in developing AI driven solutions. Such collaboration will be challenging because it requires MedTechs to change their business models, create new ways of making strategic investments, and develop novel approaches to R&D that encompass a broader spectrum of partners.

Most of MedTechs’ R&D investment is consumed by incremental innovations to their current suite of devices. This tends to reinforce existing revenues rather than develop disruptive technologies aimed at capturing new revenue streams. Such strategies are efficacious in stable, fast growing economic environments, but lose their edge in slower markets. It seems reasonable to assume that, as market conditions tighten, MedTechs will need to consider shifting their R&D strategies towards the development of more disruptive technologies. We see this already in Stryker’s R&D investment in robotic surgical systems and Zimmer’s proposed R&D spend on AI, data informatics and robotics.

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China’s rising MedTech industry and the dilemma facing Western companies


Can Western companies engage with and benefit from China?
US supremacy challenged  

US tech giants are investing heavily in AI R&D and driving the adoption of advanced technologies in healthcare. Although these companies have made, and will continue to make, a significant contribution to the field, it would be a mistake to think that they have AI healthcare markets sewn up.
Three Chinese tech giants, collectively referred to as ‘BAT’, are also investing heavily in AI systems. All three offer services well beyond their core products and have far-reaching global ambitions. BAT is comprised of Baidu, China’s largest search provider, Alibaba the nation’s biggest eCommerce platform and Tencent, which runs WeChat that has access to >1bn users on its platform. For the past five years BAT has been expanding into other Asian countries, recruiting US talent, investing in US AI start-ups, and forming global partnerships to advance their AI ambitions.
In addition to these private endeavours, China has made AI a national project. Since 2017, Beijing has been pursuing a three-step New Generation AI Development Plan, which aims to turn AI into a core national industry. To this end, China is vigorously carrying out research on brain science, brain computing, quantum information and quantum computing, intelligent manufacturing, robotics, and big data. Already, China has become a world leader in AI publications and patents. The nation’s global share of AI research papers increased from 1,086 (4.26%) in 1997 to 37,343 (27.68%) in 2017, surpassing any other country, including the US. Most AI patents are registered by companies in the US and Japan. However, when it comes to AI patents registered by research institutes, China is the undisputed leader. According to a 2021 report on China's AI development,  ~390,000 AI patent applications were filed in China over the past decade, accounting for ~75% of the world total. Beijing’s competitive advantage in big data and AI strategies is driven by a combination of its weak privacy laws, a national plan, huge government investments, concerted data-gathering, and big data analytics by the BAT tech giants and others. Currently, China’s AI market is valued at ~US$22bn, and by 2030, the nation is expected to become a leader in AI-empowered healthcare businesses and the world’s leading AI power.

Beijing’s policies have given rise to hundreds of AI driven start-ups aimed at gaining access to new revenue streams in China’s rapidly growing healthcare market. Western MedTechs might consider accepting Beijing’s  Made in China 2025 policy, partner with these  tech savvy start-ups and jointly benefit from the nation’s current 5-year economic plan aimed at a “healthier China”.

We have presented an AI-driven prescription for MedTechs to enhance the quality of care while providing access to new revenue streams. We suggest that this can be achieved by bolting on AI solutions to existing devices, and over time through partnerships with tech savvy start-ups. But ~30 years of double-digit growth derived from manufacturing physical products and distributing them through labour intensive sales channels might have cemented mindsets among C suite incumbents that find it challenging to think beyond physical product offerings. This could suggest that the wind of change, now blowing through MedTech markets, will be perceived as a temporary breeze that does not require thinking beyond physical products, and AI solutions will be a long time coming.
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  • Experienced Western healthcare professionals have little knowledge of WeDoctor a Chinese internet healthcare start-up positioned to have a significant impact on global healthcare systems over the next decade
  • Founded in 2010 and backed by Tencent, a US$0.5trn Chinese conglomerate, WeDoctor has grown rapidly to become an influential US$6bn enterprise
  • WeDoctor bundles services AI and big data strategies into smart devices to help unclog China’s fragmented and complex healthcare system and increases citizens’ access to affordable quality healthcare
  • WeDoctor has expanded its franchise outside of China and has global ambitions to become the “Amazon of healthcare
  • Is WeDoctor an exemplar for Western healthcare providers?
WeDoctor’s impact on global healthcare

The speed and scoop of technological change is forcing traditional healthcare providers to move beyond the comfort of their production models, embrace services and develop smart devices, which support customer-centric, value-based, data driven strategies. To illustrate this shift, we describe a Chinese internet healthcare start-up WeDoctor, which is having an impact on re-engineering China’s overly bureaucratic, fragmented and complex healthcare system and is positioned to influence the delivery of value-based healthcare services globally in the next decade.
In this Commentary

This Commentary describes WeDoctor and some of its recent activities to expand its influence and market share. Three things of note:

  • The partnerships that WeDoctor has developed with payers and providers, which are different to conventional transaction-based contracts
  • WeDoctor’s pragmatic approach to evolving technologies, which differentiates it from Western technology companies entering healthcare markets
  • WeDoctor might be considered as an exemplar and its strategy copied by Western companies. Because most giant Western technology companies are banned in China, local firms have stopped copying Western counterparts and innovate. This has resulted in many Chinese apps and services being better than their Western rivals. For example, Huawei’s mobiles outperform Apple’s, and China is ahead on 5G, mobile money and artificial intelligence. In 2016 the US technology publication Wired ran a cover story entitled: “It’s Time to Copy China”.
Smart Clinics

Imagine going to your primary care physician and, within a 15-minute consultation, receiving up to eleven tests, which include analysing your blood and urine, taking your blood pressure and measuring the electrical activity of your heart; and all the tests being delivered by a small portable all-in-one diagnostic device weighing just 5 kilos (11Ibs) and situated on the table of your doctor’s consulting room.

Imagine further that your test results are returned in minutes rather than days or even weeks and uploaded to your cloud-based electronic medical record to be reviewed in real time by your doctor. Simultaneously, your data are anonymously merged with similar information collected from millions of other patients and stored in a cloud file embedded with AI, in the forms of machine learning and cognitive computing, which complement and enhance the capabilities of your doctor. Your physician plays a key role in interpreting your test results and providing you with a diagnosis and treatment options as well as giving you an essential human touch of reassurance and guidance. Notwithstanding, as soon as you leave your doctor’s office, your mobile phone will suggest smart ways to monitor and manage your condition remotely. Information about your condition will appear on your social media feeds, you will also receive prompts for treatments, alerts about health supplements and suggestions about appropriate insurance policies. Currently, no amount of money can buy such a service in advanced wealthy Western economies, but it is a lead device of WeDoctor, which is available in rural China and in other emerging countries. According to Frost and Sullivana consultancy, the China market alone for remote diagnostics is currently estimated to be US$2bn and projected to grow to US$28bn in 10 years. WeDoctor’s  near-term goal is to capture a significant share of this market and help re-engineer China’s healthcare system by nudging individuals with the right piece of information at the time to maintain their health. This makes the device valuable to patients, healthcare providers and payers.

Reverse innovation
It seems reasonable to assume that, in addition to being useful in China and other emerging countries, WeDoctor’s all-in-one diagnostic device is well positioned to help enhance primary care practice in developed Western nations by a process of ‘reverse innovation’. This refers to a strategy where a product offering, which is specifically developed for emerging countries is subsequently successfully marketed in developed wealthy nations. It is particularly relevant to healthcare systems, which are universally challenged to deliver high quality outcomes with increasingly scarce resources. The strategy was formalized in a paper entitled, ‘How GE is Disrupting Itself’, which was published in the October 2009 edition of the Harvard Business Review (HBR), and subsequently expanded into a book published in 2018 entitled, ‘Reverse Innovation in Healthcare: How to make value-based delivery work’.
In the early 2000s, General Electric (GE) took an affordable, high quality portable ultrasound device, which it had developed for the Chinese market and successfully marketed it in the US and elsewhere. GE found that ‘affordability’ and ‘portability’ were universally valued healthcare factors. Jeffrey Immelt, then chairman and CEO of GE and one of the authors of the 2009 HBR paper, challenged other multinationals, “to see innovation opportunities in emerging markets in a new light. Reverse innovation was more widespread than Immelt first thought and over the past decade the strategy has become a significant part in the armoury of many multinational corporations. Although the strategy is relevant for value-based healthcare,it is rarely practiced by Western healthcare providers.
The starting point for reverse innovation healthcare strategies is emerging markets where the rapid growth in the demand for quality healthcare outstrips the development of resources and infrastructure. This creates significant opportunities for Western companies with smart solutions to common healthcare challenges. Similar to GE’s portable ultrasound device, WeDoctor’s smart all-in-one diagnostic device, in time, could be marketed in developed regions of the world where healthcare systems are struggling to improve patient outcomes while reducing costs.
WeDoctor’s pragmatism

WeDoctor, founded by Liao Jieyuan an AI specialist, is backed by Tencentwhich is one of the world’s largest technology and internet companies with a market cap of US$0.5trn and a mission to enhance the quality of life through the development and global distribution of emerging technologies. WeDoctor has a market cap of US$6bn, an established network in China of some 240,000 doctors, 2,700 large premier hospitals, over 15,000 pharmacies in 30 of China’s 34 provinces and about 160m platform users and joins a growing contingent of technology companies with a mission to change the healthcare industry, which to-date has resisted online disruption.
Notwithstanding, there is a significant difference between giant Western technology companies who have entered healthcare markets and WeDoctor. While the former have tended to invest heavily in aspirational projects such as unravelling the medical mysteries of anti-ageing, and AI systems to replace clinicians, WeDoctor has been more pragmatic and focused on making money by unclogging bottlenecks in the Chinese US$1trn healthcare market. Although Liao is an AI expert and WeDoctor is a significant user of AI, Liao believes, “AI won’t replace doctors, but will become an important tool for doctors to help improve their efficiency and accuracy”. WeDoctor has a practical mission: to enhance access to quality medical resources, improve patient outcomes and reduce costs. Indeed, Liao founded WeDoctor simply to help people book physician appointments, which is challenging in China. Chinese primary care practices are underused due to the poor distribution of resources, a lack of reputable practitioners and the nation’s relatively low number of doctors per capita. Further, waiting times to see a hospital specialist are long and patients reportedly have to pay significant amounts of money to middlemen to secure appointments.
AI healthcare systems are more challenged in the West than in China
In 2017, the Chinese central government released a plan to become the world leader in AI by 2030, aiming to surpass its rivals technologically and build a domestic industry worth almost $150 bn. WeDoctor and other Chinese healthcare providers are mindful that AI is a transformative technology for healthcare partly because of its ability to recognise patterns in vast amounts of data and to detect and quantify biomarkers in non-solid biological materials. Jamie Susskind, in his book Future Politicspublished in 2018, suggests that doctors consulting both medical and legal big data banks in support of diagnoses and treatments, will become as commonplace as  consulting standard images such as MRIs or X-rays. And if such data banks are not consulted it will be considered negligent.  
WeDoctor’s AI systems hold out the prospect of delivering rapid diagnoses, efficient triage, enhanced monitoring of diseases, improvements in personalized care and making medicine safer. Notwithstanding, a limiting factor in the use of AI systems in healthcare generally is neither investment nor the technology, but the ability to amass vast amounts of reliable personal and genomic data. This is a bigger challenge in the West than in China. More robust privacy legislation, higher levels of security and broader-based ethical concerns in the West are substantial obstacles. A significant advantage of WeDoctor is the freedom in China to collect, store, analyse and use patient, personal and genomic data on an unparalleled scale. China has yet to establish laws to protect such personal information and is systematically building health profiles on its 1.4bn citizens, which, together with Beijing’s commitment to AI, will provide scientists in China a significant advantage to lead and dominate life sciences over the next decade.
WeDoctor is one of several similar start-ups
WeDoctor is just one of several recent Chinese online start-ups employing evolving technologies to improve China’s healthcare system. Another is Good Doctor, which is an offshoot of the Ping An Insurance Group, a financial giant with a US$181bn market cap, annual revenues of US$142b and 343,000 employees. Both start-ups compete to build smart clinics in rural China.
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WeDoctor endeavours to extend its franchise

In addition to its smart diagnostic device, WeDoctor has leveraged Tencent’s substantial expertise and resources in mobile, AI and cloud-based technology to develop a significant customer-focused retail prowess and is rapidly developing a range of services for healthcare providers and manufacturers of medical devices. This positions the company well to have a significant near-term impact on Asia’s healthcare systems. In 2018 alone, WeDoctor has strengthened and extended its franchise by entering into a number of partnerships with a range of healthcare stakeholders, which include insurance companies, specialist in the procurement and distribution of medical devises and also investment companies interested in improving the physical infrastructure of southeast Asian healthcare systems. We describe some of these partnerships, which enable WeDoctor to consolidate and expand its market position both in China and internationally and suggest that Western healthcare providers should be considering similar partnerships to help them make the product to service shift.
WeDoctor and the AIA insurance group

In May 2018, WeDoctor formed a strategic alliance with the AIA Group, which is the largest public listed pan-Asian life insurance group with customers in China and across the Asia-Pacific region. WeDoctor and AIA are aligned in their ambition to partner with consumers in China and across southeast Asia to provide innovative quality healthcare and wellness offerings and financial protection solutions. The partnership provides WeDoctor with preferred access to AIA’s customer base and thereby strengthens and enlarges its networks and strategies to deliver affordable, digitally-enabled personalised healthcare offerings. AIA becomes WeDoctor’s preferred provider of life and health insurance solutions and gains access to its 160m registered users. According to Liao the partnership, “leverages AIA’s long history and extensive operations across the Asia-Pacific region . . . and is crucial to meeting the diversified life and health insurance requirements of our growing user base as we look to anticipate users’ needs, through our platform’s expanding functionality and our mission to transform healthcare through technology. This partnership not only helps us to cement our position as the premier technology-enabled healthcare solutions platform in China but also supports us as we expand our international presence in the years to come”.  
WeDoctor and China’s IVF market

Also, in May 2018, WeDoctor made a strategic investment in Reproductive Healthcare,a new in-vitro fertilisation (IVF) group, which was formed by a merger between two of Hong Kong’s largest and most reputable IVF practices. This was WeDoctor’s first investment outside of Mainland China and represents a significant milestone for the implementation of its international strategy. The new company provides a comprehensive range of IVF services, which include intra-uterine insemination, frozen-thawed embryo transfer and egg freezing services for China and the Asian region. The new company’s established frozen embryo services benefit from findings of a paper published in the January 2018 edition of the New England Journal of Medicine, which suggest that pregnancy and live birth rates are similar among women who use fresh or frozen embryos.
WeDoctor and its expanded international IVF market
In August 2018 WeDoctor, entered into an agreement with the Mason Group and Aldworth Management to acquire an 89.9% stake in Genea, Australia's leading provider of integrated advanced assisted reproductive technology (ART) services. Headquartered in Sydney, Genea has over 400 employees and is a leading international fertility group with a 30-year track record and a significant presence in New Zealand and Thailand as well as Australia. The company offers a comprehensive range of ART services, including IVF, egg and embryo freezing, genetic testing, sperm banking, day surgeries and pathology. Genea has developed proprietary technologies, including culture media and embryo transfer catheters, which are used in more than 600 clinics across 60 countries and is the only ART platform, with both services and technology, in the industry worldwide. The agreement strengthens both WeDoctor’s international strategy and its ability to increase its share of China’s US$2bn and fast-growing IVF market. WeDoctor also is targeting a bigger share of the outbound Chinese IVF medical tourism market, which in 2017, grew approximately 40% year-over-year to approximately US$151m. According to Grand View Research, the global IVF market in 2017 was valued at about US$15bn and is expected to grow at a CAGR of around 10%.
WeDoctor is China's first smart medical supply chain solutions and procurement company
In July 2018, WeDoctor entered into a joint venture (JV) with IDS Medical Systems Group (idsMED Group), to form idsMED WeDoctor China Ltd. This is China's first smart medical supply chain solutions and procurement company and is positioned to transform China’s fragmented, multi-layered and relationship-driven medical device distribution systems.
idsMED is a leading Asian medical supply chain solutions company specialising in the distribution of medical devices and consumables, clinical education and hospital design and planning. It represents over 200 global MedTech companies and has extensive Asia Pacific distribution networks with access to over 10,000 healthcare institutions. The company has 1,600 employees, including 700 experienced field sales, product and clinical specialists and 300 professional bio-medical engineers providing installation and maintenance services.
The JV, owned 51% by WeDoctor and 49% by idsMED Group leverages the respective companies’ strengths, innovative resources and networks to procure medical devices and services centrally by connecting global manufacturers directly to China’s hospitals and healthcare providers. The JV will further enhance WeDoctor’s value proposition by managing and optimizing China’s entire medical supply chain, which until now has been fragmented, overly bureaucratic and complicated. In addition, idsMED WeDoctor will set up medical education and training academies throughout China to deliver and promote medical devices and clinical education as well as accredited medical training courses for doctors and nurses.
WeDoctor & Fullerton
In September 2018 WeDoctor entered into a strategic partnership with Fullerton Health a Singapore-headquartered healthcare service provider. The alliance is, “In line with WeDoctor’s international growth strategy and will extend our reach and facilitate our development in Asia,” said Jeff Chen, WeDoctor’s Chief Strategy Officer. The JV provides WeDoctor access to Fullerton Health’s 500 healthcare facilities and its network of over 8,000 healthcare providers across eight Asian pacific markets. Fullerton Health benefits from WeDoctor’s footprint in China and broadens its patients’ access to online healthcare consultations. In the near term, both companies aim to broaden their reach in the corporate healthcare service market by opening onsite medical centres for businesses across China. In addition, the partnership plans to create about 100 primary care and specialist outpatient facilities.

Healthcare has become digital and global and long ago, the geo-political axis of the world has moved East. To remain competitive, Western healthcare providers must increase their knowledge and understanding of initiatives in China and southeast Asia, be prepared to transform their strategies and business models and engage in partnerships with a range of healthcare stakeholders, complementary enterprises and start-ups in emerging nations.
Two of China’s largest healthcare challenges are the uneven distribution of its services and its vast and escalating costs. The nation has an underserved primary care sector and the most qualified and experienced doctors are concentrated in a few premier mega-city hospitals, which account for 8% of the total number of medical centres but handle 50% of the nation’s outpatient visits. These challenges are not unique to China but experienced by healthcare systems throughout the world.

WeDoctor is an exemplar of how such universal healthcare challenges might be improved by a combination of evolving smart technologies and strategic partnerships with a range of healthcare stakeholders. As MedTech companies continue to transform their business models to increase customer-centricity, the types of partners they need to engage will only expand. In a rapidly moving market, keeping abreast of these potential collaborators is critical.

Another takeaway is that WeDoctor does not use AI and big data technologies to resolve the mysteries of medicine, but to increase access to healthcare, improve diagnoses, enhance patient outcomes and lower costs. The company also is increasing the effectiveness and efficiency of healthcare providers by simplifying and centralizing procurement processes of medical devices and pharmaceuticals.
Once WeDoctor has helped to improve China’s healthcare infrastructure, the nation would have amassed the world’s largest personal, medical and genomic data base of its citizens. WeDoctor will then be well positioned to turn its formidable AI prowess to accelerating R&D in lifesciences, improving the accuracy of early diagnoses, enhancing the monitoring of devastating life-threatening diseases and improving personalized care.
WeDoctor is an exemplar for Western MedTech companies.
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  • Over the next decade the combination of big data, analytics and the Internet of Things (IoT) will radically change healthcare
  • The social media revolution has raised peoples’ awareness of lifestyles and healthcare
  • The rise of smart watches and fitness sensors combined with IOT and Artificial Intelligence (AI) paves the way for preventative medicine becoming a key driver in the management of straining healthcare services and spending
  • Big data, analytics and the IoT is positioned to accelerate change away from output-orientated healthcare systems to value-based outcome-orientated systems
  • Patients and payers are increasingly aware of the opportunities and demanding change
  • The slowness for MedTech companies to change creates opportunities for newcomers to penetrate and grab share of healthcare markets
  • Regulation and requirements to undergo significant clinical studies to become standard of care will slow consumer and patient access to services
The IoT and healthcare
The Internet of Things (IoT) is positioned to radically transform healthcare. There are powerful social, demographic, technological, and economic drivers of this change. We describe some of these, and suggest that, within the next 10 years, there will be hundreds of millions of networked medical devices sharing data and knowhow, and this will drive a significant shift away from traditional healthcare systems focused on outputs to value-based systems dedicated to prevention and improving outcomes while lowering costs.

The IoT and its potential impact on healthcare
The IoT, which Cisco refers to as “the Internet of Everything” and GE as the “Industrial Internet” is also referred to as “machine-to-machine” (M2M) technologies, and as “smart sensors”. Whatever term is used, the IoT is an ever-expanding universe of devices embedded with microchips, sensors, and wireless communications capabilities, which enable them to collect, store, send and receive data. These smart devices and the data they collect are interconnected via the Internet, which significantly expands their potential uses and value. The IoT enables connectivity from anywhere to anywhere at any time, and facilitates the accumulation of big data and artificial intelligence (AI) to either complement or replace the human decision-maker. Over the next decade, anything that can be connected to the Internet probably will be. The Internet provides an almost ubiquitous, high-speed network, and cloud-based analytics, which, in nanoseconds, can read, analyse and act upon terabytes of aggregated medical data. Smart distributed services are positioned to become a powerful tool for health providers by optimizing medical results, preventing mistakes, relieving overburdened health professionals, improving patient outcomes, and lowering costs.
Two approaches to a common healthcare challenge

Let us illustrate the shift in healthcare referred to above by considering two different approaches to a shared healthcare challenge: that of providing people with personalized advice about maintaining and improving their wellbeing in order to ward-off lifestyle related illnesses, such as type 2 diabetes (T2DM). This is important because T2DM is a devastating lifestyle induced condition, which affects millions, costs billions, and in most cases can be prevented by lifestyle changes.
Approach 1

One approach is the world’s first nationwide diabetes prevention program, Healthier You, which was launched by NHS England, Public Health England and Diabetes UK in 2016. It is aimed at the 11m people in England thought to have pre-diabetes, which is where blood sugar levels are higher than normal, but not high enough for a diagnosis of T2DM. About 5-10% of people with pre-diabetes progress to "full-blown" T2DM in any given year. Healthier You is expected to be fully operational by 2020. Each year thereafter the program is expected to recruit 100,000 people at risk of T2DM. Personal lifestyle coaches will periodically monitor the blood sugar levels of these, and make recommendations about their diets and lifestyles. This is expected to prevent or slow the people with pre-diabetes progressing to full-blown T2DM.
Approach 2

The second approach is GymKit and Chatbox. The former is a new feature Apple is expected to add to its watch in late 2017, and the latter is a mobile app developed by Equinox, a New York-based health club chain, for its members.

Gymkit will enable the Apple watch to have seamless connectivity to the overwhelming majority of different kinds of cardiovascular equipment used in most fitness centres. Currently, there are a variety of smartphone apps, which allow gym users to connect to cardiovascular machines, but these are at best patchy. Gymkit is different, and will automatically adjust a user’s personalized needs to any cardiovascular machine without the user having to press a button. Itwill then wirelessly collect a range of data - if on a treadmill: speed, duration, incline, etc., - and combine these data with the user’s heart rate, age, gender, weight and body type to make health-related calculations and recommendations, and wirelessly transmit these to the user.

Chatbox does something similar. Ituses artificial intelligence (AI) to simulate the human voice, which talks to new health club members, encourages them to set personal goals, and sends them messages when they fall short. Further, Chatbox has sensors, which track users while they are in the gym, and suggests ways of improving and extending their personalized workouts. A survey, undertaken by Equinox of its members across 88 of its facilities reported that Chatbox users visited the fitness centres 40% more often than those without the app. This is significant because people who fail to form a habit of physical exercise tend to drop lifestyle goals.

The 2 approaches compared

Healthier You is unlikely to have more than a modest impact on the UK’s diabetes burden because the format it has adopted is like filling a swimming pool with a teaspoon. It would take over 100 years to recruit and counsel the 11m people with pre-diabetes, especially while the prevalence levels of pre-diabetes and T2DM in the UK are increasing.  Successfully changing the diets and lifestyles of large numbers of people requires an understanding of 21st century technologies. Ubiquitous healthcare technologies such as smartphone apps and wearable’s that support lifestyles abound, and have leveraged people's enhanced awareness of themselves and their health. Hence peoples’ large and rapidly growing demands for such devices to track their weight, blood pressure, daily exercise, diet etc. From apps to wearables, healthcare technology lets people feel in control of their health, while potentially providing health professionals with more patient data than ever before.  

The IoT and consumers

There are more than 165,000 healthcare apps currently on the market, there is a rapid growth in wearables, and smartphone penetration in the US and UK has surpassed 80% and 75% respectively. According to a 2017 US survey by Anthem Blue Cross, 70m people in the US use wearable health monitoring devices, 52% of smartphone users gather health information using mobile apps, and 93% of doctors believe mobile apps can improve health. 86% of doctors say wearables increase patient engagement with their own health, and 88% of doctors want patients to monitor their health. 51% of doctors use electronic access to clinical information from other doctors, and 91% of hospitals in the US have moved to electronic patient records (EPR).
Notwithstanding, these apps and wearables are rarely configured to aggregate, export and share the data they collect in order to improve outcomes and lower costs. This reduces their utility and value. However, the large and rapid growth of this market on the back of the social media revolution, and the impact it is having on shaping the attitudes and expectations of millions of consumers of healthcare, positions it well as a potential driver of significant change.

 A “minuscule fraction” of what is ultimately possible

According to Roger Kornberg, Professor of Structural Biology at Stanford University, the current capabilities of smart sensors like those used in Apple’sGymKit and Equinox’s Chatbox, “is only a minuscule fraction of what is ultimately possible . . . A sensor attached to a smartphone will enable it to answer any question that we may have about ourselves, and our environment,” says Kornberg. Smart sensors can provide you with a doctor in your pocket, which can be connected to a plethora of other devices that could collect, store, analyze and feedback terabytes of medical information in real time. Kornberg, who won the 2006 Nobel Prize for Chemistry, is excited about the disruptive effect, which smart sensors are having on traditional healthcare systems. This is because they can be connected to almost any medical device and human organ to, “monitor specimens . . . record in real time the health status of individuals,  . . . transmitelectronic signals wirelessly,  . . .  (and) provide responses to any treatment,” says Kornberg. 

Kornberg is engaged in developing sensors with the ability to detect and measure biological signals and data from humans, which can be wirelessly linked to smartphones to transmit the information for analysis, storage and further communication. Kornberg is convinced that, in the near term, we will be able to create a simple and affordable networked device that will, “detectan impending heart attack, in a precise and quantitative manner, before any symptoms”.

Potential of sensor technology

The excitement in the development of biosensors

Drivers of the IoT and market trends

Partly driving the IoT in healthcare and other industries are the: (i) general availability of affordable broadband Internet, (ii) almost ubiquitous smartphone penetration, (iii) increases in computer processing power, (iv) enhanced networking capabilities, (v) miniaturization, especially of computer chips and cameras, (vi) the digitalization of data, (vii) growth of big data repositories, and (viii) advances in AI and data mining.
Market trends suggest substantial growth in the total number of networked smart devices in use. By 2020, when the world’s population is expected to reach 7.6bn, it is projected that there will be between 19 and 50bn IoT-connected devices worldwide, more than 8bn broadband access points, more than 4m IoT jobs, and the number of installed IoT technologies will exceed that of personal computers by a factor of 10.
Crisis in primary care is a significant driver of change
In addition to these technological drivers, the simultaneous population aging and the shrinking pool of doctors also drives the IoT in healthcare. Increasing numbers of older people presenting with complex comorbidities significantly increases the large and rapidly growing demands on an over-stretched, shrinking population of doctors. This results in a crisis of care.
A 2015 Report from the Association of American Medical Colleges (AAMC) suggests that there is an 11 to 17% growth in total healthcare demand, of which a growing and aging population is a significant component. Further, the Report suggests that the US could lose 100,000 doctors by 2025, and that primary care physicians will account for 33% of that shortage.

There is a similar crisis in the UK, where trainee GPs are dwindling, young GPs are moving abroad, and experienced GPs are retiring early. According to data from the UK’s General Medical Council (GMC), between 2008 and 2014 an average of nearly 3,000 certificates were issued annually to enable British doctors to work abroad. Currently, there are hundreds of vacancies for GP trainees. Findings from a 2015 British Medical Association (BMA) poll of over 15,000 GPs, found that 34% of respondents plan to retire by 2020 because of high stress levels, unmanageable workloads, and too little time with patients.
Interestingly, Brexit is expected to compound the crisis of care in the UK. According to a 2017 General Medical Council survey of more than 2,000 doctors from the EU working in the UK, 60% said they were considering leaving the UK, and, of those, 91% said the UK’s decision to leave the EU was a factor in their considerations. 

Changing healthcare ecosystems

These trends help healthcare payers to employ IoT strategies in an attempt to replace traditional healthcare systems, which act when illnesses occur and report services rendered, with value-based healthcare systems focused on outcomes. US payers are leading this transformation. Some payers in the US have employed IoT strategies to convert a number of devices used in various therapeutic pathways into smart devices that collect, aggregate and process terabytes of healthcare data gathered from thousands of healthcare providers, and electronic patient records (EPRs) describing millions of treatments doctors have prescribed to people presenting similar symptoms and disease states. Cognitive computing systems analyse these data and instantaneously identify patterns that doctors cannot. Such systems, although proprietary, are positioned to help reduce the ongoing challenges of inaccurate, late, and delayed diagnoses, which each year cost the US economy some US$750bn and lead to between 40,000 and 80,000 patient deaths.
IBM Watson
IBM’s supercomputer, Watson is a well-known proprietary system that uses IoT strategies that include a network of smart sensors and databases to assist doctors in various aspects of diagnoses and treatment plans tailored to patients’ individual symptoms, genetics, and medical histories. Watson draws from 600,000 medical evidence reports, 1.5m EPRs, millions of clinical trials, and 2m pages of text from medical journals. A variant, IBM Watson for Oncology, has been designed specifically to help oncologists, and is currently in use at the Memorial Sloan-Kettering Cancer Center in New York. Also, it is being used in India where there is a shortage of oncologists. The Manipal Hospital Group, India’s third largest healthcare group, which manages about 5,000 beds, and provides comprehensive care to around 2m patients every year, is using Watson for Oncology to support diagnosis and treatment for more than 200,000 cancer patients each year across 16 of its hospitals.
In 2016 IBM, made a US$3bn investment designed to increase the alignment of its Watson super cognitive computing with the IoT, and allocated more than US$200m to its global Watson IoT headquarters in Munich. IBM will have over 1,000 Munich-based researchers, engineers, developers and business experts working closely with specific industries, including healthcare, to draw insights from billions of sensors embedded in medical devices, hospital beds, health clinics, wearables and apps in endeavors to develop IoT healthcare solutions.
Using a similar IoT network of smart sensors and databases, Babylon, a UK-based subscription health service start-up, has launched a digital healthcare AI-based app, which offers patients video and text-based consultations with doctors, and is designed to improve medical diagnoses and treatments. Early in 2017, NHS England started a 6-month study to test the app’s efficacy by making it available to 1.2m London residents. The Babylon app is expected to be able to analyse, “hundreds of millions of combinations of symptoms” in real time, while taking into account individualized information of a patient’s genetics, environment, behavior, and biology. Current regulations do not allow the Babylon app to make formal diagnoses, so it is employed to assist doctors by recommending diagnoses and treatment options. Notwithstanding, Ali Parsa, Babylon’s founder and CEO says, "Our scientists have little doubt that our AI will soon diagnose and predict personal health better than doctors”.
Market forecasts

Market studies stress the vast and growing economic impact of the IoT on healthcare. Business Insider Intelligence (BII) suggested that the IoT has created nearly US$100bn additional revenue in medical devices alone. It forecasts that cost savings and productivity gains generated through the IoT and subsequent changes will create between US$1.1 and US$2.5trillion in value in the healthcare sector by 2025. In 2016, Grand View Research Inc. projected that the global IoT healthcare market will reach nearly US$410bn by 2022. A 2013 Report from the McKinsey Global Institute on Disruptive Technologies, suggests that the potential total economic impact of IoT will be between US$3 and US$6trillion per year by 2025, the largest of which will be felt in healthcare and manufacturing sectors. Although forecasts differ, there is general agreement that, over the next decade, the IoT is projected to provide substantial economic and healthcare benefits in the way of cost savings, improved outcomes, and efficiency improvements.
IoT and MedTech companies

We have briefly described the impact of the IoT on patients, healthcare payers and providers. But what about MedTech companies? They have the capabilities and knowhow to develop and integrate the IoT into their next generation devices. However, MedTech innovations tend to be small improvements to existing product offerings. Data, accumulated from numerous smart medical devices, are enhanced in value once they are merged, aggregated, analyzed and communicated. And herein lies the challenge of data security. Arguably the greater the connectivity between medical devices, the greater the security threat. In 2013 the FDA issued a safety communication regarding cyber security for medical devices and health providers, and recommended that MedTech companies determine appropriate safeguards to reduce the risk of device failure due to cyber-attacks. The cautious modus vivendi of most MedTech companies suggests that, in the near term, a significant proportion will not develop IoT strategies, and this creates a gap in the market.
The IoT and new and rising healthcare players

Taking advantage of this market gap is a relatively small group of data-orientated companies, which have started to employ IoT technologies to gain access to healthcare markets by developing specific product offerings, increasing collaborative R&D, and acquiring new data oriented start-ups. For instance, in addition to IBM and Apple mentioned above, Amazon is expected to enter the global pharmaceutical market, which is anticipated to reach over US$1 trillion by 2022. Microsoft has used IoT strategies to build its Microsoft Azure cloud platform to facilitate cloud-based delivery of multiple healthcare services. Google Genomics is using IoT strategies to assist the life science community organise the world’s genomic data and make it accessible by applying the same technologies that power Google Search to securely store petabytes of genomic information, which can be analysed, and shared by life science researchers throughout the world.

The powerful social, demographic, technological and economic drivers of healthcare change over the next decade suggest an increasing influence of IoT technologies in a sector not known for radical or innovative change. Research suggests that hundreds of millions of networked medical devices will proliferate globally within the next decade. The potential healthcare benefits to be derived from these are expected to be significant, especially through enhancing preventative and outcome-oriented healthcare while reducing costs. This has to be achieved in a highly regulated environment where concerns of data security are paramount. To reap the potential benefits of the IoT in healthcare, policymakers will have to reconcile the need for IoT regulation with the significant projected benefits of the IoT. Smart technologies require smart management and smart regulation.
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  • Misdiagnosis means unnecessary suffering and the loss of life
  • 15% of all medical cases are misdiagnosed
  • 44% of some types of cancers are misdiagnosed
  • Misdiagnosis results from the way doctors are trained

Can AI reduce medical misdiagnosis?
Inaccurate or delayed medical diagnosis is more widespread than often thought, and results in a staggering toll of harm and patients’ deaths.
Unnecessary suffering
Each year, in the US an estimated five per cent of all medical cases are misdiagnosed. ‘Not bad’, some might say given the millions of Americans who visit their doctors’ each year presenting thousands of different disease states each with multiple symptoms. But five per cent translates to 12 million annual misdiagnoses in the US alone, which is, “the tip of the iceberg” according to Professor Graham Neale, an expert in misdiagnosis from the Centre for Patient Safety and Service Quality at Imperial College London.
A 2012 study reported in The American Journal of Medicine suggests that 15% of all medical cases in developed economies are misdiagnosed. Professor Neale suggests that 15% of all UK cases are also misdiagnosed. The Mayo Clinic Proceedings suggest that misdiagnosis could be as high as 26%, and according to The Journal of Clinical Oncology, a staggering 44% of some types of cancers are misdiagnosed.
Misdiagnosis means unnecessary suffering, the loss of life, and unnecessary costs. For example, 33% of the $3trillion spent each year on healthcare in the US is considered “wasted” because of medical misdiagnoses. And data released in 2015 by NHS England’s Litigation Authority in response to a Freedom of Information request show compensation paid to people misdiagnosed rose from £56 million in 2009-10 to more than £194 million in 2013-14.

According to Sebastian Lucas, former Professor of Clinical Histopathology at King’s College London, the most common misdiagnosis found through post-mortem examinations are the over diagnosis of cardiac disease, the under diagnosis of pulmonary-embolism, the over and under diagnosis of cancer, and the under diagnosis of significant infections.

What are the most common misdiagnosis found through autopsy? By Sebastian Lucas

Medical misdiagnosis occurs when either a condition is undiagnosed, or where an incorrect diagnosis is made. An example of the former is when a patient with a health problem has visited their doctor over a period, and the doctor fails to diagnose the illness.  An example of the latter is when, say, a fracture is diagnosed as a sprain.


Why misdiagnosis occurs
Reasons given for misdiagnosis include the fragmented nature of healthcare systems, and the over burdened, demoralised and scarce supply of primary care doctors. See, Curing the Problems of General Practice. In 2008 Eta Berner and Mark Graber published a paper in the American Journal of Medicine entitled, ‘Diagnostic Error: Is Overconfidence the Problem?’ which suggests that both intrinsic and systemically reinforced factors lead doctors to be over confident in their ability to diagnose, and once a diagnosis is made and a treatment pathway started, a momentum occurs, which is difficult to change.
Doctors trained to take short cuts
At the root of misdiagnosis is the way that doctors are trained, says Jerome Groopman, Professor of Medicine at the Harvard Medical School, and Chief of Experimental Medicine at Beth Israel Deaconess Medical Center.
Groopman’s thesis is predicated on the concept of the availability heuristic developed by Nobel Laureate Daniel Kahneman, notable for his work on the psychology of judgment and decision-making. In his book How Doctors Think, Groopman suggests that doctors are trained to recall similar recent cases when making a diagnosis. For example, common infections picked up by children at school often affect entire communities. Once a doctor has seen, say, nine such cases, the information about them is immediately available in his subconscious, and creates a tendency for the tenth patient presenting similar symptoms to be diagnosed the same although the actual illness might be different.
Such mental shortcuts are indispensible in a medical setting. In A&E, for example, doctors are encouraged to use mental shortcuts to help them make rapid decisions often on incomplete information; failure to do so could mean the difference between life and death.
Will misdiagnosis increase?
Structural reasons suggest that misdiagnosis will not be reduced in the near term. According to the Royal College of General Practitioners the shortage of doctors in the UK is the worst it has been for 40 years. Established GPs are retiring early, and a significant proportion of newly qualified GPs are moving abroad where pay and working conditions are better. One hundred primary care practices, serving 700,000 patients across Britain, are facing closure, and the number of doctor-patient consultations is estimated to rise from 338 million in 2013 to 441 million by 2017.

Similarly in the US, the Association of American Medical Colleges predicts increasing shortages of doctors: 130,600 by 2025. One reason for the shortage is the aging of both doctors and their patients. According to a 2012 Physicians Foundation survey, nearly half of the 830,000 doctors in the US are over 50, and approaching retirement.

Thus, fewer doctors in both the UK and US face having to diagnose an increasing number of aging patients presenting complex conditions, at a time when the volume of medical data are doubling every 73 days. Under such conditions it seems reasonable to assume that the incidence of misdiagnosis will not decrease.

Increased role for cognitive computers in medicine
Will the increased pressure on doctors to diagnose more accurately be helped by artificial intelligence (AI)? Although there are some challenges for AI in a medical setting, it is well positioned to play an increased role in diagnosis. This is confirmed by Google’s DeepMind AlphaGo computer’s landmark defeat of Lee Sedol, a 33-year-old grandmaster of the ancient Asian game GO in March 2016. Let us explain.
AI: the complex algorithms that analyze and transform electronic medical data, into clinically relevant medical opinions for health professionals has developed significantly as the demand for healthcare increased, healthcare costs escalated, and the supply of doctors decreased.

What is the next "big thing" in healthcare? By Devi Shetty

The relationship between the game GO and medical diagnosis
For some time, cognitive computers have been able to defeat the world’s best human players of games such as draughts and backgammon by enumerating every possible move, and drawing up rules for how to guarantee that a computer will be able to play to at least a draw. Although more complex, chess computers rely on a modified version of the same tactic. In 1997 for example, when IBM’s Deep Blue computer defeated former world chess champion Garry Kasparov, it could evaluate 200 million possible moves in a second.
But GO is different: its simplicity belies its astonishing complexity. There are more legal board states for a game of GO than there are atoms in the universe, and just like in medical diagnoses, reaction and intuition are important. These intangible aspects of the game GO, and diagnosis, make them resistant to the tactic by which games in the past have been “solved” by computers. Experts predicted that it would take another 10 years before a computer program would stand a chance even against a weak GO player. This is why a computer’s defeat of Lee Sedol, signaled a landmark moment for AI, and has implications for medical diagnosis.

GOis played by two people on a 19-by-19 grid-board, with 361 black and white stones, 181 black and 180 white. Each player takes turns placing their stones in an attempt to surround and capture their opponent’s pieces. The player who controls more territory is the winner. The first move of a game of chess offers 28 possibilities; the first move of a game of GO can involve placing the stone in one of 361 positions. An average game of chess lasts around 80 turns, while on average GO game lasts for some 150 turns, which leads to a staggering number of possibilities.

Cognitive computing and diagnosis
Cognitive computing systems that understand, reason, and learn, also are able to see health data that were previously hidden, and do more than we ever thought possible. Doctors have access to such computers, which provide them with collective knowledge gathered from thousands of healthcare providers, millions of patients’ records, and millions of treatments other doctors have prescribed to people presenting similar symptoms and disease states. Such computers are capable of analyzing in seconds these data and identifying patterns that humans cannot.

Further, unlike doctors, computers work 24-7, 365 days a year, they never get tired or demoralised, and they never leave. Also, computers are faster and more thorough than doctors, and can analyse vast amounts of patient data, identify trends in seconds and consistently make more accurate diagnoses. One example is IBM’s Watson, a computer, already being used in medicine, which can attain high levels of cognitive behaviour. Watson uses natural language processing to analyse structured and unstructured data common in clinical notes and reports, and can read 40 million medical documents in 15 seconds, understand complex questions, and identify and present evidence based solutions and treatment options. In the US similar computer programs have stopped making clinical recommendations based on the most popular therapies prescribed by its users, to providing doctors with clinical recommendations based on patient outcomes.
Challenges for AI in medical diagnosis
Despite the fact that AI systems are getting smarter there are still significant challenges associated with the compatibility of computer systems, the integrity of medical data; and data security and access. Further, as AI systems get smarter so the line between computers recommending and deciding becomes blurred. Healthcare providers are wary not to allow their AI systems to make clinical decisions because this would mean that they would be viewed as “medical devices”, and require FDA approval, which can be a costly and lengthy process to obtain.
Doctor’s resistance to AI systems
A doctor’s raison d'être has been to diagnose and treat illnesses, which ordinary people cannot do because it requires expertise, intuition and interpersonal skills. Some doctors argue that computers will never be able to provide such skills. But medical knowledge, which previously resided in the minds of the few doctors, has become readily available to everyone over the Internet, and doctors have changed from being the sole processors of that knowledge, to being the interpreters of such knowledge; in this scenario AI has an important role.

Professor Stephen Hawking and other leading scientists have warned of the dangers of AI becoming “too clever”. There are also concerns about data security and privacy, and some doctor’s fear cognitive computers could diminish their role. However, the defeat of Lee Sedol by AlphaGo has demonstrated that computers can attain high levels of intelligent behavior, and this has significant implications for medicine in general and diagnoses in particular.
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